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.
