Unlike peers like Lloyds and Natwest which retrenched in the wake of the financial crisis to become fairly straightforward lenders, Barclays still has a major investment banking arm.
This allowed it to follow in the footsteps of US peers which earlier this month reported a major boost from the recent frenzy of dealmaking in financial markets and the wider corporate world.
“For Barclays this was balanced out by a big decline in bond trading but still enabled it to deliver a notable beat of analyst expectations and a record nine-month performance,” said AJ Bell’s Danni Hewson.
“The Covid recovery, uncertain as it is, has also allowed Barclays to release some of the cash buffer it built up to cover any loan defaults which resulted from the pandemic. This underpins the bank’s commitment to returning capital to shareholders through dividends and share buybacks.
“Barclays also pointed to an improving rate environment which should boost margins as it supports an increase in how much Barclays charges to lend.
“A decade or more of ultra-low rates has really put the profitability of this core banking function under pressure.
Management are clearly reading the runes and like many observers drawing the conclusion that inflationary pressures will force central banks to increase interest rates sooner rather than later.”