Barclays Announces $670 Million Share Buyback as One-Off Charges Weigh on Profit

Barclays (BARC.L) surprised investors on Wednesday by announcing a $670 million share buyback and upgrading its full-year profit target, expressing confidence in its income growth and cost-cutting progress — despite taking fresh provisions and a hit from weaker investment banking performance.

The British lender set aside an additional £235 million to cover a motor finance mis-selling scandal and booked a £110 million charge related to the collapse of U.S. firm Tricor, one of several recent bankruptcies that have raised broader concerns about banks’ exposure to the private credit market.

Share Buyback Lifts Sentiment, But Investment Banking Disappoints

Barclays said it would begin making quarterly buyback announcements and now expects to exceed an 11% return on equity this year, rather than merely meet that figure — thanks to stronger-than-expected income and accelerated cost-saving measures.

CEO C.S. Venkatakrishnan said the improved outlook allowed the bank to bring forward plans to return additional capital to shareholders.
“We have been consistently building capital for our shareholders for nine consecutive quarters,” Venkatakrishnan said in an update.

The bank’s third-quarter pre-tax profit fell 7% to £2.1 billion, roughly in line with analysts’ expectations.

Matt Britzman, senior equity analyst at Hargreaves Lansdown, said, “Despite the headline noise, Barclays’ latest results show that the bank is quietly performing well.” He added that excluding the motor finance provision, profits would have been 13% above expectations.

However, the bank’s investment arm delivered a mixed performance. Income from the unit rose 8% year-on-year, driven by a 15% increase in global markets revenue, but fees from deal-making fell 2%, lagging behind Wall Street peers that saw double-digit growth amid a rebound in corporate confidence, mergers, and fundraising.

Speaking to reporters, Venkatakrishnan dismissed suggestions that weak results reflected underinvestment in the business, saying instead that “a few large deals this quarter simply didn’t go our way.”

According to LSEG data, Barclays dropped six places to 14th in the global mergers ranking last quarter, and is currently seventh year-to-date, behind six U.S. firms.

One bright spot came from its U.S. consumer banking operations, where income grew 19% on higher pricing and the acquisition of General Motors’ co-branded card portfolio.

Concerns Over Private Credit Exposure

The collapse of several highly leveraged U.S. firms has drawn attention to the loosely regulated private credit sector, where lending standards have weakened amid a surge in corporate borrowing.

Venkatakrishnan said Barclays had no exposure to First Brands, an auto parts manufacturer that recently filed for bankruptcy, noting that the bank had declined to do business with the company over concerns about its financial projections.

Barclays said its exposure to private credit totaled £20 billion, or about 6% of its overall loan book, with roughly 70% of that concentrated in the United States.

Despite the headwinds, the bank’s renewed focus on efficiency, capital discipline, and shareholder returns has reassured investors. Barclays shares rose modestly following the announcement.

(Exchange rate: $1 = £0.7451)