Shares soar as Barclays raises buy-backs

Barclays' shares soared yesterday after the bank reported higher first- half profits and told investors it had pounds 200m more to spend on share buy- backs this year than it had previously thought. The group will buy in pounds 700m of shares this year rather than the pounds 500m it promised shareholders six months ago.

The shares reached a high of pounds 14.65, a gain of 137.5p, before closing at pounds 14.47, 119.5p up on the day. In line with other financial stocks, they have soared recently as the stock market has reappraised the prospects for banking profits in the current low-inflation environment.

Reported profits for the six months to June were flat at pounds 1.27bn, but before a one-off hit to the bank's leasing activities from a change in the rate of corporation tax there was an underlying 8 per cent increase. The figures were in line with expectations, as was a 17 per cent increase in the dividend to 13.5p.

Analysts were taken aback by the surge in the share price, which added almost 10 per cent to the value of the bank. It followed big jumps in the past week from HSBC and Loyds TSB after they reported better than expected first-half results.

Martin Taylor, chief executive, said the decision to increase the scale of this year's buy-backs reflected a stronger capital position than six months ago when he had made a prudent assessment of the bank's excess funds. Barclays has already bought back pounds 290m of shares, leaving pounds 410m still to come, and has returned pounds 1.75bn to shareholders over the past two years.

One of the features of the figures was a sharp improvement at BZW, the investment banking division where profits collapsed in the second half of last year. Although below the pounds 148m achieved in the first six months of 1996, the pounds 124m interim profit compared favourably with the pounds 42m in yesterday's second half.

Profits would have been almost as good as last year's first half were it not for a pounds 20m loss on equity derivatives trading in the run up to the Budget. Changes to the rules on dividend tax credits hit contracts which had been written on the basis of the previous rules.

Mr Taylor was upbeat about prospects for BZW, following an improvement in its return on capital from 8 to 12 per cent. Earlier this week, rival NatWest Markets reported a 2.4 per cent return on its equity.

He insisted there was more to go for at the equities, markets and investment banking operation, and set a target return of 20 per cent for the business. The division has been radically overhauled since chief executive Bill Harrison arrived from Robert Fleming last year, with all three of its main operations now under new leadership.

Elsewhere, personal and business banking both grew strongly. Personal banking benefited from consumer sector growth, especially in credit card and consumer finance areas.

Investment Column, page 23

Suggested Topics
Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
News
i100
Travel
Suite dreams: the JW Marriott in Venice
travelChic new hotels in 2015
Arts and Entertainment
Sink the Pink's 2013 New Year's Eve party
musicFour of Britain's top DJs give their verdict on how to party into 2015
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

Selby Jennings: Quantitative Research | Equity | New York

Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...

Selby Jennings: SVP Model Validation

Not specified: Selby Jennings: SVP Model Validation This top tiered investment...

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

Day In a Page

Aren’t you glad you didn’t say that? The worst wince-and-look-away quotes of the year

Aren’t you glad you didn’t say that?

The worst wince-and-look-away quotes of the year
Hollande's vanity project is on a high-speed track to the middle of nowhere

Vanity project on a high-speed track to nowhere

France’s TGV network has become mired in controversy
Sports Quiz of the Year

Sports Quiz of the Year

So, how closely were you paying attention during 2014?
Alexander Armstrong on insulting Mary Berry, his love of 'Bargain Hunt', and life as a llama farmer

Alexander Armstrong on insulting Mary Berry and his love of 'Bargain Hunt'

From Armstrong and Miller to Pointless
Sanchez helps Gunners hold on after Giroud's moment of madness

Sanchez helps Gunners hold on

Olivier Giroud's moment of madness nearly costs them
A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect