SCOTTISH banker John McFarlane has hailed the impact of the cost-cutting strategy he has accelerated at Barclays as it recorded a four per cent rise in profit.
However shares slipped 6.3 per cent as the bank outlined a cost of around £1 billion to separate its retail and investment banking operations to meet a 2019 deadline for ring fencing.
The stock closed down 15.9p at 237.25p.
Mr McFarlane, who has been running Barclays as executive chairman since the summer sacking of then chief executive Antony Jenkins, said results for the third quarter showed progress in the group’s core business areas.
The impact of Mr McFarlane’s drive to trim costs can be seen by a five per cent reduction in total operating expenses to around £12.47m in the nine months to September 30.
Finance director Tushar Morzaria said the group has made “tremendous progress” on reducing its costs.
He said: “Achieving further cost reductions beyond 2016, in core and non-core, remains a key priority for us.”
Adjusted pre-tax profit was up from £4.94bn to £5.16bn Barclays helped by the investment banking and Barclaycard divisions, with the latter turning in a record performance mainly thanks to its growth in the United States.
On an adjusted basis pre-tax profit in the third quarter grew by one per cent to £1.8bn.
There was a £290m provision for UK customer redress relating to rates provided to some customers on foreign exchange transactions.
It did not take any additional payment protection insurance charges in the third quarter.
But it did book a £270m provision for settlement of litigation around US mortgages.
Barclays has already confirmed this week that Jes Staley, born in Boston, Massachusetts, will take over as its new chief executive on December 1.
Mr McFarlane indicated further changes and cost reductions are on the way and said: “We now have a forward agenda that has been discussed and agreed with Mr. Staley.
“We will update the market on our plans for structural reform after we have agreed them with the regulator.
“Now that we have a new CEO in place, we will provide further updates on future direction at the full year results."
In July Mr McFarlane outlined his plan to cut costs as a percentage of income to the “mid-50s per cent” and reduce non-core assets to £20bn by 2017.
The cost to income ratio in the third quarter was 58 per cent and Mr Morzaria said executives will “continue to drive down” that area.
However the impact of ringfencing caused the bank to raise its guidance for core costs in 2016 from £14.5bn to £14.9bn.
Analysts suggest the appointment of Mr Staley, who worked at JP Morgan for more than 30 years before joining hedge fund BlueMountain Capital Management in 2012, points to Barclays working towards a return to its former investment banking glory days.
Richard Hunter, head of equities at Hargreaves Lansdown, described the results as "something of a curate's egg" as Barclays continues to reposition itself as a more streamlined bank.
He added: "There are some promising signs within most of the key metrics, such as the return on equity, a comfortable capital cushion and a further reduction in impairments.
"By business, Barclaycard has performed strongly in terms of income and profit in the year to date, whilst the Investment Bank has also notably improved in the period.
"The strategic direction of the latter remains unclear, however, with the new chief executive already having commented on its necessary transformation to a less capital intensive model, even before he has taken up the reins."
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