Barclays benefits from rate hikes and deposits as customers switch accounts amid global banking crisis
Barclays benefited from a £10bn influx of deposits as anxious customers switched accounts amid a global banking crisis.
The group was also boosted by rising interest rates, with its first quarter profits soaring 16% to £2.6bn, the highest level in 12 years.
Shares rose 5.3%, or 8.18p, to 162.04p, with the results suggesting Barclays emerged relatively unscathed from the turmoil that rocked the sector last month.
Riding the storm: Barclays was boosted by rising interest rates as its first quarter profits climbed 16% to £2.6bn, the highest level in 12 years
Managing director CS Venkatakrishnan – known as Venkat – said strong risk management “helped insulate Barclays from recent events”.
It was the first major UK bank to report on a tumultuous period in which bank stocks around the world came under severe pressure.
Credit Suisse saw a £55bn client exodus in the quarter while struggling US lender First Republic suffered a £58bn drop in deposits, with the revelation fueling further selling.
Venkat said: “We have seen volatility in elements of the banking sector. They have been very specific to the institutions involved, but that throws a bit of a shadow.
“It’s calmed down a lot but it’s not completely gone like we’ve seen in the last few days in the United States.”
The bank increased deposits by £10bn to £556bn, mostly from business customers.
In the UK, retail banking revenue increased 23% to £1.3 billion, driven by higher interest rates.
Venkat said the outlook for the UK and US was “a bit better” than six months ago, adding: “That doesn’t mean we’re out of the woods.”
“It’s better than we thought, but we’re still not back to what we would consider to have achieved a soft landing.” This forces us to be a little more cautious.
Meanwhile, Deutsche Bank’s profits rose 9% to £1billion, but it said it would cut 800 jobs.
Staley says he’s ‘serious’
The Barclays boss said new allegations about former chief executive Jes Staley were “very serious” – but defended the board’s handling of the episode.
Allegations about Staley’s relationship with pedophile Jeffrey Epstein have emerged in US court cases, which Staley’s lawyers have called “baseless”.
The board backed Staley when regulators probed the ties in 2020, but he stepped down in 2021.
Venkat told Bloomberg: “Although I am not a board member, I know individually and collectively that they use very careful and detailed processes to make their decisions.”