The Investment Column: Barclays keeps a grip on costs
Friday 08 August 1997
What appeared to please the analysts was better cost control than they had expected and lower provisions against bad debts.
BZW, the investment banking operation that was such an embarrassment only six months ago, appears to be on the mend and investors are to get pounds 700m in share buy-backs this year, rather than the pounds 500m investors had been promised last February.
The methodology Mr Taylor used to calculate how much of Barclays' capital is surplus to requirements is well beyond ordinary mortals.
But it needs no rocket science to understand a total of pounds 1.75bn of value handed back to shareholders in the past two years. It is little wonder the shares have more than doubled since the start of last year.
Banking in the UK led the charge, with profits showing a healthy 30 per cent improvement. Personal banking and the corporate side, the powerhouse of the group, did well, despite a squeeze in margins in all areas except mortgages.
BZW's profits of pounds 124m were three times higher than the disastrous second half of 1996 and the investment bank's return on capital rose from 8 per cent to a more respectable 12 per cent. That is still barely above BZW's cost of capital, but it is at least moving in the right direction.
The question is whether the stock market is putting too much faith in the current return on equity of 24 per cent being sustainable.
After yesterday's sharp increase, the shares trade on around 12 times Salomon Brothers' expected earnings per share of 128p for next year, assuming profits of pounds 2.7bn.
That puts it in the middle of the pack, above NatWest and the Scottish banks, but below Lloyds TSB, HSBC and Halifax.
The leaders have better growth prospects and Barclays' rating is now about right.
- 1 Sabina Altynbekova, the girl branded 'too good looking' for volleyball, says social media obsession with her is a 'bit much'
- 2 Disney heiress Abigail disowns her share of family profits in West Bank company
- 3 The secret report that helps Israel hide facts
- 4 'Women should not laugh in public,' says Turkey's Deputy Prime Minister in morality speech
- 5 Israel's propaganda machine is finally starting to misfire
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK
Sabina Altynbekova, the girl branded 'too good looking' for volleyball, says social media obsession with her is a 'bit much'
Disney heiress Abigail disowns her share of family profits in West Bank company
'Women should not laugh in public,' says Turkey's Deputy Prime Minister in morality speech
Drew Barrymore’s sister Jessica found dead in her car surrounded by 'dozens of white pills'
The secret report that helps Israel hide facts
Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
A day in the life of Vladimir Putin: The dictator in his labyrinth
Putin is 'thuggish, dishonest and reckless', says British ambassador to US
Richard Dawkins tweets: 'Date rape is bad, stranger rape is worse'
Boozy, ignorant, intolerant, but very polite – Britain as others see us
- < Previous
- Next >
iJobs Money & Business
£600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...
£450 - £650 per day + competitive: Orgtel: My client, a leading bank, is curre...
£350 - £400 per day + competitive: Orgtel: Senior Analyst, ALM Data, Halifax, ...
£500 - £600 per day: Orgtel: Java developer - Banking - London - Up to £600/d...