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Barclays Reveals 16% Drop in Q3 Net Profit as Loan Troubles Persist

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Barclays Bank Reports 16% Drop in Net Profit in Third Quarter

Barclays, one of the largest banks in the United Kingdom, has announced a 16% decrease in net profit for the third quarter due to souring loans and rising costs. The bank reported a profit after tax of £1.3 billion, down from £1.5 billion in the same quarter last year. This decline in profit comes despite a 5% increase in revenues to £6.3 billion, driven by higher interest rates.

The bank also revealed that credit impairment charges, which are funds set aside to cover expected bad loans, rose to £433 million. This increase can be attributed to factors such as rising interest rates and weaker house prices. In comparison, the charges were £381 million in the third quarter of 2018.

Barclays’ income from corporate and investment banking experienced a 6% decrease, primarily due to lower customer activity caused by financial market volatility. The bank’s Chief Executive, CS Venkatakrishnan, emphasized that despite these challenges, Barclays is effectively managing credit and maintaining discipline in managing costs.

In a statement, Venkatakrishnan said, “We see further opportunities to enhance returns for shareholders through cost efficiencies and disciplined capital allocation across the group.” Although Barclays has already been implementing cost-cutting measures, the bank has indicated that there will be more cutbacks in the future.

The bank’s latest financial results reflect the challenges faced by the banking industry as a whole, including the impact of Brexit uncertainty and global economic slowdown. Barclays’ performance in the third quarter is in line with the wider trend of decreased profits among UK banks. However, it is worth noting that other major UK banks such as HSBC and Lloyds have reported mixed results, indicating that the challenges faced by the banking sector are not uniform.

Barclays is not the only bank to have experienced a decline in profits recently. Earlier this month, Deutsche Bank reported a net loss of €832 million in the third quarter, primarily due to restructuring costs and ongoing legal issues. These results highlight the difficult operating environment for banks in the current economic climate.

Investors and analysts will be closely monitoring Barclays’ future performance as the bank continues to navigate the challenges of a changing market. The bank’s focus on managing credit and reducing costs will be crucial in maintaining shareholder confidence and profitability.

Barclays’ financial results provide valuable insight into the overall health of the UK banking sector, and further emphasize the need for banks to adapt to the changing economic landscape. As Brexit approaches, banks will need to remain resilient and adaptable to ensure their long-term success in a potentially volatile environment.

More detail via Malay Mail here… ( Image via Malay Mail )

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