Barclays posted a pre-tax revenue that fell 4% to £1.9bn within the third quarter as mortgage margin strain and decrease deposits outweighed increased rates of interest.
The financial institution provides that group income was down 2% to £6.3bn from a yr in the past, because it confronted “mortgage margin compression and decrease present accounts deposit volumes according to wider market developments and cost-of-living pressures”.
Nevertheless, it factors out that UK gross sales rose 10% to £5.8bn, buoyed by Financial institution of England base fee expenses which have lifted 14 instances since December 2021 to five.25%.
The enterprise says gross mortgage lending hit £5.6bn within the third quarter, down from £7.8bn final yr, however a slight acquire on the £5.5bn of property loans in accomplished within the second quarter of this yr.
There was a 14% rise within the sum of money put apart for potential defaults throughout the group, to £433m in contrast with £381m a yr earlier. Nevertheless, the money put apart for defaults in its UK enterprise fell by 27% within the third quarter.
The lender’s group internet curiosity margin — the distinction between what it expenses to debtors and what it pays out to savers – had been 3.15% over the 9 months to the tip of September.
Nevertheless, it forecast internet curiosity margin would fall to between 3.05% and three.10% over the remainder of its yr.
AJ Bell head of monetary evaluation Danni Hewson says: “Web curiosity margin is the metric the banks are judged on so it’s not a shock to see Barclays closely punished for downgrading steering right here even when revenue for the third quarter was forward of steering.
“It’s by no means a very palatable message for shareholders to listen to a enterprise goes to be much less worthwhile.
“Whereas the banks had been seen as beneficiaries of upper rates of interest, and maybe had been for a time, the aggressive and regulatory pressures to match will increase in the price of borrowing with charges provided for money on deposits imply this profit has not proved lengthy lasting.”
Hargreaves Lansdown head of non-public finance Sarah Coles provides: “Barclays stated many of the 6% drop in deposits was from present accounts, and that it mirrored broader market developments.
“It might imply there’s extra of the identical revealed when Lloyds and NatWest report later this week.”
Barclays group chief govt C. S. Venkatakrishnan factors out that the financial institution’s outcomes got here “towards a blended market backdrop, as we continued to handle credit score properly, remained disciplined on prices and maintained a powerful capital place”.
He added that the enterprise would search for efficiencies in several elements of the financial institution in a convention name with reporters.
Barclays shares had been down 6% to 135.4p in early afternoon buying and selling.
A number of main UK banks report outcomes this week, together with Lloyds Banking Group and Santander UK tomorrow, Commonplace Chartered on Thursday and NatWest on Friday.