Barclays Q3 Earnings Hit $1.61 Billion, Prepares for Loan Defaults Amid Cost Efficiency Strategy

Barclays sets aside £433m for potential loan defaults, delivers robust performance in U.S. credit cards sector, while preparing for major cost reductions and underperforming Street revenue expectations.

Barclays reported a net income of $1.61 billion for Q3, falling short of predicted revenue with $7.92 billion, causing Barclays’ shares to drop 10% since the start of the year.
The bank has set aside an additional £433 million in anticipation of increased loan defaults, largely due to soaring interest rates and decreasing home prices.
Despite pressure on margins, Barclays' UK-based net interest margin rose from 2.78% to 3.15%, indicating profitability from higher interest rates set by central banks. However, the bank predicts a decline in the following year, ranging between 3.05% and 3.1%.
Barclays CEO C.S. Venkatakrishnan signaled forthcoming cost reductions across the group to 'enhance returns for shareholders,' with revised financial targets to be provided in the full-year results.
Despite weakening investment bank revenues, the financial institution reported stronger performances in its consumer and credit card sector, particularly in the U.S., but plans to reassess capital allocation priorities amid a 'mixed market backdrop.'