FINANCIALS: Barclays (BACR) Q4 Results
Solid results from Barclays alongside firm guidance. Issuance should be limited in 2025, but should see a decent amount of AT1 refinancing. LLR tick up mostly driven by Tesco bank and not expected to reoccur.
- Barclays UK income £2,615. up 46% on Q4 23 , of which around 30% was the gain on Tesco Bank. The IB provides £2,607m in income, up 28% vs Q4 23.
- OpEx Down 1% year on year.
- CET1 declines 0.2% during the quarter. +20bps of capital generation more than offset by dividends (-8bps) RWA increases (-15bps) and the Tesco Bank Acquisition (-21bps)
- FY LLR 46bps, target 50-60bps through cycle. Q4 LLR jumps to 66bps - highly driven by Tesco Bank. Ex Tesco Bank the LLR only increases 10bps to 47bps, which seems more reasonable.
- Structural hedge income to peak in 2025, falling away slowly in 2026 and more rapidly thereafter.
Issuance
- £3.1bn of AT1's maturing in 2025 could see Barclays coming to market soon with an AT1. All BACR's 2025 AT1 calls have very high float spreads and we would fully expect calls if markets remain at current levels as we covered in our 2025 AT1 calls preview - https://mni.marketnews.com/4gxCLaR
- Only £3bn of total T2 calls/maturities spread through 2025 & 2026
Targets/Guidance
- Management targets an upgrade at Moody's or S&P in time, in order to achieve and A- composite rating, currently rated Baa1 & BBB+ respectively.
- NII guided to increase to in 2025. RoTE Targets would imply c.170bps/c.200bps of capital generation in 2025/2026 - with a reasonably low payout ratio - although the balance of the £10bn payout will be through share buy backs.
Headlines
- "*BARCLAYS PLANS TO RETURN AT LEAST £10B TO HOLDERS '24 TO '26
- *BARCLAYS SEES 2025 CET1 RATIO 13% TO 14%, EST. 13.9%
- *BARCLAYS SEES 2025 ROTE ABOUT +11%, EST. +10.7%
- *Barclays End-4Q CET1 Ratio 13.6%
- *BARCLAYS 4Q PRETAX PROFIT GBP1.66B, EST. GBP1.62B
- *BARCLAYS 4Q INVESTMENT BANK REV. GBP2.61B, EST. GBP2.47B
- *BARCLAYS 4Q NET INTEREST INCOME GBP3.50B, EST. GBP3.29B" - bbg
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EQUITY TECHS: E-MINI S&P: (H5) Bear Threat Remains Present
- RES 4: 6178.75 High Dec 6 and key resistance
- RES 3: 6163.75 High Dec 16
- RES 2: 6068.25/6107.50 High Jan 6 / High Dec 26
- RES 1: 5991.72 50-day EMA and a pivot resistance
- PRICE: 5893.50 @ 07:22 GMT Jan 14
- SUP 1: 5809.00 Low Jan 13
- SUP 2: 5784.00 Low Nov 4
- SUP 3: 5698.25 50.0% retracement of the Aug 5 - Dec 6 bull leg
- SUP 4: 5658.00 Low Sep 12 ‘24
A bear threat in the S&P E-Minis contract remains present and the contract traded to a fresh short-term low on Monday. The reversal from the Dec 26 high, confirms the end of the Dec 20 - 26 correction. 5866.00, the Dec 20 low and a key short-term support, has been cleared. This strengthens a bearish theme and sights are on 5784.00, the Nov 4 low and an important short-term support. Initial pivot resistance is seen at 5991.72, the 50-day EMA.
USD: A red start for the Dollar
- A red start for the Dollar going into the Europe session, losing a few more pips against the ILS, TWD, ZAR as well as the DXY hovering near its session low.
- Reports that the Trump team is looking for a more gradual approach on Tariffs has favoured some USD unwound, and as such the Greenback sits in the red against all the majors, although the CAD, MXN and the Yen trade closer to flat.
- Early best performer is the Kiwi, up 0.57%, but nothing too impressive if you consider that NZDUSD has fallen a whopping 13.12% since the 30th September and that Friday's and Yesterday's lows were the lowest printed levels since October 2022.
- That short term double low of 0.5542, will be the initial support, while small resistance is seen towards 0.5642 initially.
GOLD TECHS: Holding On To The Bulk Of Its Recent Gains
- RES 4: $2762.3 - High Nov 1
- RES 3: $2730.4 - 76.4% retracement of the Oct 31 - Nov 14 bear leg
- RES 2: $2726.2 - High Dec 12
- RES 1: $2698.0 - High Jan 10
- PRICE: $2670.1 @ 07:22 GMT Jan 14
- SUP 1: $2642.9 - 50-day EMA
- SUP 2: $2596.2/2583.6 - Low Dec 30 / 19
- SUP 3: $2564.4 - Low Nov 18
- SUP 4: $2536.9 - Low Nov 14 and a key support
Recent gains in Gold appear corrective - for now. However, the yellow metal is holding on to the bulk of last week’s gains and scope is seen for a continuation higher near-term. A stronger recovery would open $2726.2, the Dec 12 high and an important resistance. Clearance of this level would be a bullish development. On the downside, a reversal lower would expose $2583.6, the Dec 19 low. Initial support is at $2642.9, the 50-day EMA.
