Barclays sees forecasts cut
ANALYSTS slashed their forecasts for Barclays yesterday after the British bank warned of weakness in second quarter investment banking revenues and difficulties in Spain.
Barclays shares fell 5.6 per cent to 255p following guidance from finance director Chris Lucas that “investment banking market conditions in May and June have been softer, in particular reflecting lower levels of capital markets and mergers and acquisitions activity”. Speaking at an analyst conference on Wednesday, Lucas also said Barclays’ corporate division in Spain was suffering from falling real estate valuations in the region.
Royal Bank of Scotland reacted the most aggressively. RBS analysts cut their earnings per share expectations this year by 26 per cent and dropped their price target 10p to £4.10. “Aside from the cyclical weakness in Barclays Capital and the group’s Spanish operations, our updated forecasts also capture the UK bank levy, lower corporate tax rates and a £1bn gain on own debt,” RBS said.
Nomura expected first half BarCap revenues of £6.8bn, down 35 per cent year-on-year, while Exane BNP Paribas changed its first half forecast from £7.5bn to £6.9bn. Analyst Ian Gordon wrote: “Although these trends are already well understood by the market, formal consensus has yet to ‘catch up’.”
The downward revisions came as Barclays announced the launch of a private banking joint venture in Japan with Sumitomo Mitsui Financial Group, the country’s third-largest public bank. Nine Barclays staff will work on the project, which will try to tap the $16 trillion (£10.6 trillion) Japanese savings market.