Shares of Barclays (NYSE: BCS) are down 27% YTD compared to a 16% drop in the S&P 500 over the same period. In addition, it currently trades at $8 per share, which is 28% lower than its fair value of $11, Trefis estimates. Barclays rating, The bank beat consensus estimates for earnings in the third quarter of 2022, with net income (income minus loan loss provisions) improving 4% year-on-year to £5.57 billion. However, this was down 11% year-on-year to $6.6 billion in dollars due to the negative impact of exchange rate movements (Note: Barclays originally reports in GBP (pounds), converted to USD for ease of comparison). Barclays UK sales grew in the third quarter as a result of higher net interest income. In particular, the group’s total net interest income improved 35% (in USD) year-over-year as a result of higher interest rates and credit growth. On the other hand, the Barclays International unit suffered losses due to a significant decline in equity trading and lower investment banking revenues, partially offset by growth in FICC (fixed income. currency and commodities) business and consumer, cards and payment units. Overall, adjusted net income fell 11% to $1.78 billion.
The bank’s total revenue for the first nine months of 2022 grew 4% year-over-year to $24.2 billion. However, this translated to net sales of $23.3 billion – down 3%, due to an unfavorable build-up of loan loss provisions. In addition, adjusted net income was down 31% year-over-year to $5 billion.
Going forward, we expect trading revenue and net interest income to maintain their growth momentum in the fourth quarter. All together, Barclays Earnings It is estimated to be about $29.3 billion in FY2022. In addition, BCS’s adjusted net profit margin is expected to remain stable at approximately 22%, leading to adjusted net profit of $6.3 billion and annual earnings per share of $1.48. This combined with a P/E multiple of just over 7x should lead to a valuation of $11.
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