Monday, 31 October 2011

Spain is still a headache for Barclays

SPAIN / UK (Source: Barclays has posted better-than-expected third quarter results after it slashed its exposure to Eurozone sovereign debt in the last three months. Ignoring a £1 billion accounting gain, adjusted pre-tax profit in the third quarter rose 5 per cent year-on-year to £1.34 billion, while profit in the first nine months of the year was up 18 per cent to £5 billion. Barclays Capital, the bank’s investment arm, outperformed the sector, declining 15 per cent to £2.25 billion, compared to the more drastic falls from some European investment banks.>>>

The firm cut its exposure to sovereign debt in Spain, Portugal, Greece, Ireland and Italy by 31 per cent to £8 billion in the three months to 30 September, with the largest cuts coming from Spanish and Italian debt.
Barclays’ shares opened up very positively this morning, at one point up over 3 per cent, before plunging in the wake of fading Eurozone optimism, currently trading down 1.64 per cent at 197.9p at 12.45pm.
The loss continues Barclays’ downward trend from Friday, as the shares readjust from the remarkable 18 per cent rise seen on Thursday following the Eurozone summit. Brokers Evolution Securities and Nomura reiterated their buy rating on the shares, maintaining a target of 280p and 268p respectively.
Bob Diamond, chief executive of Barclays, declared himself pleased with the strong performance ‘despite significant economic and market headwinds’.
He said, ‘These results demonstrate the continued progress towards our 2013 goals through building momentum across retail and corporate banking businesses and strong relative performance by Barclays Capital in difficult market conditions.’
Earlier this year, Diamond set out a plan to increase Barclays' return from equity to 13 per cent by 2013, although analysts believe the worsening economic conditions, with the possibility of a double-dip recession in Britain, will make this very hard to achieve.

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