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Business Times
30-04-2025
- Business
- Business Times
Barclays beats first-quarter forecasts as Trump turmoil supercharges trading
[LONDON] Barclays booked a stronger than expected 19 per cent increase in first-quarter profit on Wednesday (Apr 30), as trading activity surged in the early months of US President Donald Trump's tenure and the bank made progress on boosting its share of the lucrative UK lending market. The British bank's profit before tax for January to March was £2.7 billion (S$4.7 billion), up from £2.3 billion a year ago and above analysts' forecasts for £2.5 billion, according to LSEG data. Income at the investment bank rose 16 per cent from a year ago to £3.9 billion, above analysts' forecasts for £3.5 billion. The bank's results beat forecasts thanks to better-than-expected income generation in its investment bank, albeit the gains would be tempered by concerns about tariff impacts on the economy, analyst Gary Greenwood at Shore Capital said. Barclays' shares rose 0.3 per cent in early trading, and have more than recovered from a 7 per cent loss earlier this month following Trump's initial burst of tariffs on Apr 2. The update from the Britain and US-focused lender showed some progress on plans to deliver more stable returns, after years of restructuring and wild swings in its investment bank's performance. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Under CEO CS Venkatakrishnan, Barclays is trying to bolster earnings by cutting costs and putting more focus on its domestic British lending business. Barclays reiterated its performance goals for the year, and lifted guidance for 2025 income to above £12.5 billion from a previous forecast of £12.2 billion, spurred by expected growth at its domestic division where it has been competing hard for mortgage and consumer lending business. But economic uncertainty from the tariffs prompted the bank to set aside an additional £91 million charge against potential future losses, mainly in its US consumer bank and investment bank. CEOs of British banks have urged the UK finance ministry to ditch crisis-era ringfencing rules separating consumer lending operations from more volatile investment banking, but Venkat pledged support for the existing regulation. 'The most important part of that regime is actually the one that protects millions of people and the cash that they leave the banks and small companies as well,' he told reporters. 'I come on the side of the positive protection, and I therefore come on the side of no change in the ringfencing regime.' Wall Street says worse to come The strong performance from Barclays' investment bank matched US rivals that have reported bumper profits so far this year. Barclays said income from its fixed-income trading rose 21 per cent, better than an average of 6 per cent among the top five Wall Street banks, as its securitised products and interest rates-related businesses performed strongly. But Barclays' equities income rose 9 per cent versus an average of 32 per cent for the top five US players, Bank of America, Citi, Goldman Sachs, JPMorgan and Morgan Stanley. Wall Street bank bosses have warned that the outlook for the rest of the year is murkier, as trade tensions threaten rising inflation and possibly a recession. Capital productivity at Barclays' investment bank, watched closely by investors as the bank progresses its new three-year strategy to shift resources to its domestic unit, rose 1.2 percentage points to 7.7 per cent, Finance Chief Anna Cross said. 'Five quarters into our three-year plan, we remain on track to deliver our goals,' CEO Venkatakrishnan told reporters on a conference call. REUTERS
Yahoo
24-04-2025
- Automotive
- Yahoo
Santander paves way for UK exit with shake-up of car finance arm
Santander is plotting to ditch its scandal-hit motor finance unit in a shake-up which could pave the way for the bank to exit the UK entirely. The Spanish lender is seeking approval to separate its British car finance division – which is subject to a wave of possible litigation linked to the ongoing car loan mis-selling case – from the rest of its UK banking business. Santander, along with other lenders, has already set aside millions to cover possible compensation costs after a landmark court ruling said 'secret' commissions paid to car salesmen by drivers were unlawful. Separating the scandal-hit unit from the rest of the UK bank could make it more attractive to potential buyers, City analysts say. Santander has been exploring plans to exit Britain because of frustrations around the regulatory regime alongside concerns about the car finance case. Benjamin Toms, of RBC Capital Markets, said: 'Shifting of the consumer finance business out of the UK subsidiary could be an important step in this sale process. 'Given the ongoing litigation in the motor finance space, removing this product from the equation, will likely help with the marketability of the Santander UK asset.' Gary Greenwood, of Shore Capital, added: 'It's difficult to find buyers when you've got an unquantifiable liability. It's unlikely that a buyer would take on that sort of risk.' The UK bank's heavy exposure to the mortgage market placed pressure on the British division's profitability, which created 'frustration' in the upper ranks of the Spanish lender's management, Mr Toms said. Santander's plans come as the UK's Supreme Court gets ready to decide whether lenders should be made liable to pay compensation to drivers. The total bill for the payout is an estimated £38bn, which would be paid by dozens of banks and specialist lenders. Rachel Reeves, the Chancellor, was previously blocked from intervening in the case amid concerns about the wider impacts of any ruling on Britain's economy. In its application to intervene, the Treasury warned in February that a ruling in favour of drivers could 'adversely affect the United Kingdom's reputation as a place to do business, with a consequent impact upon economic growth.' Lenders including Close Brothers and Lloyds Banking Group have made more than £1bn in provisions to cover the costs of paying compensation to customers who say they were mis-sold loans. Santander declined to comment. Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
Telegraph
23-04-2025
- Automotive
- Telegraph
Santander paves way for UK exit with shake-up of car finance arm
Santander is plotting to ditch its scandal-hit motor finance unit in a shake-up which could pave the way for the bank to exit the UK entirely. The Spanish lender is seeking approval to separate its British car finance division – which is subject to a wave of possible litigation linked to the ongoing car loan mis-selling case – from the rest of its UK banking business. Santander, along with other lenders, has already set aside millions to cover possible compensation costs after a landmark court ruling said 'secret' commissions paid to car salesmen by drivers were unlawful. Separating the scandal-hit unit from the rest of the UK bank could make it more attractive to potential buyers, City analysts say. Santander has been exploring plans to exit Britain because of frustrations around the regulatory regime alongside concerns about the car finance case. Benjamin Toms, of RBC Capital Markets, said: 'Shifting of the consumer finance business out of the UK subsidiary could be an important step in this sale process. 'Given the ongoing litigation in the motor finance space, removing this product from the equation, will likely help with the marketability of the Santander UK asset.' Gary Greenwood, of Shore Capital, added: 'It's difficult to find buyers when you've got an unquantifiable liability. It's unlikely that a buyer would take on that sort of risk.' The UK bank's heavy exposure to the mortgage market placed pressure on the British division's profitability, which created 'frustration' in the upper ranks of the Spanish lender's management, Mr Toms said. Santander's plans come as the UK's Supreme Court gets ready to decide whether lenders should be made liable to pay compensation to drivers. The total bill for the payout is an estimated £38bn, which would be paid by dozens of banks and specialist lenders. Rachel Reeves, the Chancellor, was previously blocked from intervening in the case amid concerns about the wider impacts of any ruling on Britain's economy. In its application to intervene, the Treasury warned in February that a ruling in favour of drivers could 'adversely affect the United Kingdom's reputation as a place to do business, with a consequent impact upon economic growth.' Lenders including Close Brothers and Lloyds Banking Group have made more than £1bn in provisions to cover the costs of paying compensation to customers who say they were mis-sold loans. Santander declined to comment.
Telegraph
17-02-2025
- Automotive
- Telegraph
Reeves bid to intervene in car finance scandal blocked by court
The Supreme Court has rejected Rachel Reeves's attempt to intervene in the car finance scandal, dealing a blow to banks but a boost to millions of drivers. The Chancellor had sought to intervene and block tens of billions of pounds in compensation payouts to drivers who had been mis-sold car loans. The Treasury argued the scandal threatened to undermine the UK economy and deter investment, saying pay outs must be limited. However, the Supreme Court on Tuesday rejected the application. It is scheduled to hear the case on car finance mis-selling in early April. The case revolves around whether salesmen have a duty to inform customers about bonuses, commissions or fees they received when they sell drivers loans to finance car deals. An early ruling suggested they do, opening up the possibility of a flood of legal claims from drivers who were not informed when they bought their vehicles. Estimates suggest the bill for compensation could total up to £38bn. The Chancellor had sought to step in to shield banks from a flood of lawsuits. The Treasury said compensation must be proportionate to the harm suffered from any alleged mis-selling. The failure of the application triggered a slump in share prices for banks and lenders. Close Brothers fell more than 8pc, Vanquis was down more than 6pc and Lloyds Bank was among the biggest fallers on the FTSE 100, down 1.9pc. The Supreme Court's decision now means only the Financial Conduct Authority will have an opportunity to intervene in the case, which is set to be heard in April. The UK's financial watchdog had requested to intervene in the case separately over concerns a ruling against lenders could destabilise Britain's banking industry. Gary Greenwood at Shore Capital said: 'The situation and potential outcome remains subject to significant uncertainty and, although the mood music had arguably been improving, this news highlights that the process will be far from straightforward in its resolution.' In its application to intervene, the Treasury had said a ruling against lenders at the Supreme Court could 'adversely affect the United Kingdom's reputation as a place to do business, with a consequent impact upon economic growth.' Charlie Nunn, chief executive of Lloyds Bank, warned in December that the car finance mis-selling scandal was putting investors off investing in the UK. He said: 'Investors are looking at this and saying this principle of the courts coming up with decisions independently from the regulation – which is then having a significant retrospective look back — is bleeding across the whole economy.' The Supreme Court is reviewing a ruling made by the Court of Appeals in October, which shocked the industry and went against long established convention. Lenders Close Brothers and FirstRand, which owns car financing company MotoNovo, later won permission to appeal the ruling at the Supreme Court. The Treasury and FCA both submitted requests to intervene in the Supreme Court's review in January. News of the Treasury's application caused shares in leading British lenders to surge in January on hopes they would be shielded from claims. A Government spokesman said: 'We respect the Court's decision to not grant our application to intervene in the Hopcraft case and will monitor it closely.'
