BARCLAYS: Markets have been too calm, hitting trading revenues 'hard'

  • Calm waters in the markets hurt trading revenues at Barclays in Q3.
  • The third quarter was clearly a difficult one for our Markets business,” CEO Jes Staley said.
  • Overall profits, however, jumped by 19% before tax to £3.4 billion.

LONDON — Global markets are too quiet for Barclays’ markets business, which the bank said on Thursday was hit “hard” during the third quarter of 2017.

Barclays reported its third quarter results on Thursday, and broadly speaking, they were pretty good. Profits jumped by 19% before tax compared to the same period in 2016, which the bank put down to “lower litigation and conduct and Non-Core costs.” Profits were £3.448 billion in the quarter.

Beyond the headline number, however, and Barclays’ markets business didn’t have much fun in the quarter, with the lack of volatility to blame.

In the words of the bank:

“Markets income decreased 14% to £3,535m reflecting a 27% reduction in Macro income to £1,314m, due to lower market volatility and the impact of exiting energy-related commodities, as well as an 8% reduction in Equities income to £1,267m driven by lower equity derivatives revenue, partially offset by improved performance in cash equities and equity financing.

“The third quarter was clearly a difficult one for our Markets business within BI. A lack of volume and volatility in FICC hit Markets revenues hard across the industry, and we were no exception to this trend,” Chief Executive Jes Staley said in a statement alongside the results announcement, reinforcing the numbers.

Staley, however, was broadly positive about the state of the bank in his statement, saying: “The third quarter of 2017 was particularly significant for Barclays as it was the first for many years in which we have not been in some state of restructuring.

“Having closed the Non-Core unit, and sold our controlling interest in Barclays Africa in June, we now have the end state Transatlantic Consumer and Wholesale Bank – in Barclays UK and Barclays International – which we set out to build in March of 2016.”

By no means is Barclays alone as a big bank struggling to make money in its markets business in the current climate. In July, Deutsche Bank blamed “lower client activity resulting from low volatility in the market,” for falling revenues in the second quarter of the year.

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