Analysts 'Likely' to Downgrade Barclays Following Bad Results

Equity analysts were pleased with the bottom-line performance of Barclays core business revealed in its latest results but revenues fell across the board

Erin Davis 28 April, 2016 | 12:59PM
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Barclays' earnings of £433 million, 2.7p per share, in the first quarter equated to an unimpressive 3.8% return on equity for the no-moat bank. We’re likely to reduce our £3 fair value estimate as we incorporate Barclays’ weak performance and softening growth projections into our fair value estimate.

The best news, in our opinion, was the lack of bad news

We saw both good news and bad news in Barclays’ results. The best news, in our opinion, was the lack of bad news; Barclays didn’t report any large legal charges in the first quarter, and its performance in investment banking was better than expected given the difficult environment. We were also pleased with the bottom-line performance of the core business, which saw profits improve 18% compared with the year-ago quarter on the non-recurrence of heavy litigation and restructuring charges in 2015.

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About Author

Erin Davis  is a senior banking analyst for Morningstar.