Barclays – why to buy

Excellent LEX article from FT. Simple common sence reasoning why to buy into Barclays restructuring. We are long Barclays.


April 27, 2016 12:55 pm

Barclays: a life more ordinary

It is plain to see why chief executive Jes Staley wants to turn Barclays into a transatlantic bank targeting the US and UK. Return on tangible equity for the group was a measly 3.8 per cent in the first three months. Strip out a medley of European and Asian businesses plus the South Africa bank, and the return on its “core” operations rises to a respectable 10 per cent.

Just look at Lloyds: the UK-focused lender boasts a market capitalisation nearly two-thirds higher than Barclays in spite of a balance sheet that is nearly two-fifths smaller.

A 17 per cent year-on-year decline in Barclays’ UK profits, driven by lower mortgage margins, augurs tougher times ahead. Its shares have underperformed the MSCI UK bank index this year and trade at a tangible book value of just 0.6 times, compared to restructuring play RBS on 0.7. Barclays’ shares rose 2 per cent yesterday. This is not yet a recovery but a welcome sign of ordinariness.

Leave a Comment

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s