Barclays missed profit expectations in the third quarter after its investment bank underperformed, despite a boost from trading desks. The FTSE 100 lender posted a £2.3bn pre-tax profit for the three months to the end of September, just below internal consensus of £2.4bn, though up 12 per cent year-on-year.
Total income at its investment bank — a crucial revenue generator for the group — reached £3.1bn, compared with a forecast of £3.3bn. The division grew by just one per cent from the same period in 2025.
Equities surge, fixed income slides
Barclays' equities arm mirrored a similar trend on Wall Street, surging 47 per cent to £1bn, driven by market volatility sparked by the US-Iran conflict. However, fixed income plunged 19 per cent year-on-year to just over £1bn, following reduced client activity in rates and credit, alongside macroeconomic headwinds.
CS Venkatakrishnan, Barclays' chief executive known as Venkat, has rolled out a major restructuring of the group's investment bank as a central pillar of his multi-year strategy.
Costs and restructuring
The group's operating expenses for the period totalled £4.6bn. The bank recorded £201m in Structural Cost Actions (SCAs), up from £93m, after confirming it had managed to reduce its cost base through "technology-enabled FTE [Full-Time Equivalent] reductions, creating capacity for further investment in the business".
A further £300m of SCAs has been set aside for the fourth quarter of 2026, with the aim of driving additional structural efficiency savings. Within Barclays' UK retail banking division, income climbed five per cent in the latest quarter to £1.8bn, buoyed by structural hedge earnings and robust mortgage balance growth.
Budget concerns loom
The update arrives less than a week before Chancellor John Healey delivers his maiden Budget, with banks widely expected to be targeted in a significant tax raid. Healey has faced intense pressure from the left of the Labour party and trade unions to impose higher taxes on the sector, following the substantial profits generated by the industry this year.
The most straightforward option at Healey's disposal would be to raise the banking surcharge levied on top of corporation tax. Currently set at three per cent, the surcharge was cut from eight per cent during Jeremy Hunt's tenure as Chancellor in 2023. A reversal of that reduction is believed to be under consideration, a move that would generate approximately £2bn annually.
