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Barclays Stock Plunges 10% On Decreased Profitability

Barclays (LON: BARC) stock price lost almost 10% on the news of decreased profitability by the banking giant. The British multinational universal bank reported a 14% decrease in its pre-tax profits for its 2022 fiscal year. This was a worse than expected profitability decline that adversely affected Barclays share price.

In the recently released financial statement, Barclays saw a 26% increase in its costs last year. The decline in investment bank’s profits has surprised many investors. Analysts were expecting an increase in profitability amid high-interest rates and an increase in the cost of borrowing.

The report also showed that the lender’s net profit fell from 8.2 billion pounds to 7 billion in 2022. In addition, Barclays also had to set aside credit impairment charges of 1.2 billion pounds. The latest data shows that the British investment giant is still way behind its Wall Streets competitors.

There was also a decrease in the ROE, which remained at 10.2% compared to 14.4% in the previous year. Apart from regulatory fines, a decrease in dealmaking fees was also the reason behind these results.

Barclays Reports 14% Decrease In Profits

Despite a 14% decrease in profits, the fixed-income trading department of Barclays still performed well. There was a 39% year-over-year decrease in deal-making fees which came out to be 2.2 billion pounds.

Barclays performed strongly in 2022. Each business delivered income growth, with Group income up 14%. We achieved our RoTE target of over 10%, maintained a strong Common Equity Tier 1 (CET1) capital ratio of 13.9%, and returned capital to shareholders.

Venkatakrishnan – Group Chief Executive

The group’s chief executive C.S Venkatakrishnan had a completely different conclusion about the financials. According to him, the bank performed quite strongly in 2022, and all business sectors showed significant growth. He also anticipated strong growth in 2023.

Nevertheless, the market thought otherwise as the Barclays stock price opened far below its Tuesday closing. At the time of writing, Barclays shares are trading on London Stock Exchange at 169.62p. This is a 9.4% decline from the previous closure and a 12% decrease from this year’s high. If bulls don’t reclaim the 173p level soon, then the price could retest its December 2022 low of 151 GBX.

Barclays stock chart
Barclays Stock Chart