Barclays is drawing up fresh cost-cutting plans after a slowdown across its investment bank and concerns over a rise in customer defaults led to a slight drop in third-quarter profits.
The lender also saw growth in net interest income from its UK retail business stall, suggesting it was no longer benefiting from a gap between what it charges for mortgages and what it pays out to savers.
Barclays said its pre-tax profits fell 4% between July and September compared with a year earlier, to £1.9bn, roughly in line with analyst expectations.
The bank did not announce additional payouts to shareholders. However, Barclays’ chief executive, CS Venkatakrishnan, said he was considering ways to reduce costs in order to boost dividends for investors. “We see further opportunities to enhance returns for shareholders through cost efficiencies and disciplined capital allocation across the group.”
He said he would provide an update for investors after the release of Barclay’s full-year results in the new year, “which will include setting out our capital allocation priorities, as well as revised financial targets”.
Profits from its corporate and investment bank tumbled 11% in the third quarter. While the bank recently took part in Arm’s $65bn (£53bn) stock market debut, bosses said the division’s woes reflected “lower client activity” more broadly.
There was a 14% rise in the amount of money put aside for potential defaults, to £433m compared with £381m a year earlier. However, the cash put aside for defaults at its UK business fell by 27% in the third quarter, suggesting confidence about the prospect of mortgage borrowers keeping up with payments.
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Meanwhile, net interest income at the UK bank rose just 1%, to £1.6bn in the quarter. The figure is likely to be cheered by campaigners who claimed banks were failing to pass on higher interest rates to savers while raising charges for home loan customers.