Barclays reported pre-tax profits of £3.3 billion in the second quarter on Tuesday, up 31 per cent, as the TUC called for the bank's profit surcharge to be increased to 35 per cent.
The FTSE 100 lender said strong share trading activity helped lift quarterly profit. It also upgraded its guidance, telling investors it now expects group revenue of around £31.5 billion this year, up from around £31 billion previously.
Paul Nowak, general secretary of the TUC, said: “Big banks like Barclays are eating away at a time when working people and local businesses are struggling. This is an opportunity for the new prime minister and chancellor to show whose side they are on. It is time to increase bank fines and tax banks to reduce electricity bills.”
The surcharge is levied on bank profits in addition to corporate tax. HMRC set the rate at 3 per cent from 1 April 2023, down from 8 per cent, and increased the bank group allowance to £100 million. Business Matters reported in October that the Treasury is considering bringing back the extra tax to 8 percent, a move expected to raise around £2 billion a year.
Speaking on a press call with reporters, CS Venkatakrishnan, Barclays chief executive known as Venkat, dismissed suggestions that banks could be the target of more tax under Andy Burnham's government, saying the sector already pays “the highest level of tax in the world”.
He added: “We think the history that we and other banks have in terms of supporting UK growth and UK lending … is very important to the health of the economy, and we hope that will be looked at.”
Barclays is the first of the UK's big three banks to report first-half earnings since Burnham appointed John Healey as chancellor on 20 July.
The club's earnings rose 16 per cent to £8.3 billion in the second quarter, beating City's estimates. In the first half, revenue rose 11 per cent to £16.5 billion, with pre-tax profit up 17 per cent to £6.1 billion.
The investment bank reported that pre-tax profit rose 32 per cent to £1.7 billion in the quarter, while income from trading assets rose 45 per cent. The results follow record profits at Wall Street banking giants, where traders profited from volatility in financial markets.
Corporate banking revenue rose 8 per cent to £1 billion during the year and profit before tax rose 30 per cent to £566 million. In retail banks, net interest profit, the difference between what a bank charges borrowers and what it pays out to savers, rose 8 per cent to £4.5 billion, while profit before tax rose 10 per cent to £1.8 billion. Private banking and wealth income rose 2 per cent to £713 million, while profit before tax fell 21 per cent to £186 million.
The bank raised its provision for loan losses to £1.4 billion, from £1.1 billion, which it said was “primarily driven” by funding set aside to deal with the collapse of Market Financial Solutions, a Mayfair-based provider of mortgage and bridging funds that collapsed amid fraud allegations.
Barclays also launched a £1 billion share buyback and increased interim dividends to 5.9p a share, up from 3p per share in the same quarter last year. The three-year targets it set out in February include around £2 billion of cost savings and more than £15 billion in profits by the end of 2028.
Barclays shares fell 5 per cent, or 27¼p, to 503p. The stock is up nearly 40 percent over the past year. Some analysts say the investment bank's performance has lagged behind Wall Street rivals, which saw share sales boosted by SpaceX's initial public offering.
Gary Greenwood, investment analyst at Shore Capital, said stocks had a strong performance and “expectations were met”. He said that the investment bank had “performed very well” and said that the banking companies of this group were “more than reducing the softness of consumers”.
