Barclays BCS -1.00%
PLC’s profit jumped in the third quarter, boosted by rising interest rates, increased household use of credit cards and volatile bond markets.
Net profit rose 10% from a year earlier to £1.5 billion, equivalent to $1.72 billion, in the three months through September, the London-based bank said Wednesday. The total exceeded analysts’ expectations.
Barclays runs the world’s sixth-largest investment bank, as well as retail and credit-card businesses in the US and the UK
Barclays joined other big lenders in bracing for a recession. The bank set aside £381 million in the third quarter, more than triple the amount of a year earlier, to cover losses if consumers and businesses fall behind on loans in coming months. For now, though, Barclays said there are no signs of trouble.
Consumers charged more on Barclays-issued credit cards—including on those tied to a new partnership with US retailer Gap Inch.
—over the summer. That could be a sign borrowers are using cards to cope with higher inflation as prices rise faster than paychecks. But households largely stayed on top of payments, Barclays said. Credit-card delinquencies, a measure of late payments, remained low.
“So far we have not seen emerging signs of stress,” in the credit-card business, Barclays Chief Executive CS Venkatakrishnan told reporters. “People are being prudent.”
Barclays also got a boost from interest-rate increases by central banks to tame inflation. Those increases enable Barclays to charge customers higher rates on mortgages, credit cards and other loans. The amount Barclays earned in interest, or net interest income, rose 20% in the third quarter from a year earlier.
Meanwhile, Barclays said volatility in bond and currency markets stoked more trades. Revenue from its fixed income, currency and commodities business rose 93% from a year earlier to £1.546 billion, a record third-quarter haul based on figures going back to 2014.
Other big investment banks have reported weak third-quarter earnings due in part to the slowing global economy. High inflation, rising interest rates and slowing economic growth have led many companies to pause plans to buy or merge with other firms, or sell shares to the public.
Investment banks provide advice on such deals, and the slowdown has cut into a key source of their earnings, though volatile markets mean that securities-trading businesses have held up better. Barclays said the amount it earned from investment-banking fees fell 45% year over year.
Barclays shares in London have fallen about 20% this year. They were down 0.3% Wednesday.
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