Barclays beats profit forecasts despite the costs of investment banks

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LONDON (Reuters) – British Barclays (Reuters)BARC.L) beat Wednesday third-quarter profit forecasts and posted more revenue in its investment bank under pressure, although its costs increased.

PHOTO FILE: the Barclays logo is visible on one of its branches in Madrid, Spain, in this photo of March 22, 2016. REUTERS / Sergio Perez / Photo file

The results gave Barclays' shares a first rise after reporting a pre-tax profit of £ 1.6 billion, excluding litigation and conduct costs, over £ 1.33 billion expected by analysts polled by the bank.

"Despite the macroeconomic uncertainty, and in particular the concerns about Brexit that heavily affect market sentiment, 2018 is proving to be a year of delivery of our strategy in Barclays," said CEO Jes Staley.

The bank's shares increased by 0.7% to 0747 GMT, outperforming the European STOXX .SX7P index, down 0.5%.

Profit has excluded costs from litigation and fines for misconduct, which in recent years have penalized Barclays as it paid for the misdeeds during and after the financial crisis.

The profits of the Barclays group for the first nine months of 2018 decreased compared to the same period last year, as it has booked a £ 1.4 billion agreement with the US Department of Justice on securities guaranteed by mortgage.

Since taking over the role of CEO, Staley has pushed a strategy driven by investment banking that has attracted criticism from some shareholders and was the goal of a campaign led by activist investor Edward Bramson .

While the transatlantic consumer and the wholesale lender recorded an increase in the 19% market income in the third quarter, this resulted in a cost.

Barclays International's cost-income ratio rose to 69 percent from 62 percent in the first quarter. Barclays is targeting a ratio of less than 60 percent at group level over time.

Meanwhile, the unit return on tangible capital was 7 percent, compared to 19.9 percent in the Barclays card and payment industry and 22 percent for Barclays UK.

The bank also said it will repay $ 2.65 billion of preferred stock, with a move that would reduce its annual financing costs by £ 165 million a year.

At the end of the third quarter, Barclays recorded a better core capital ratio than expected of 13.2 percent. This had been depleted by the fines and costs of misconduct in recent years and was a further source of concern for investors.

Barclays reported confidence in capital levels in August by announcing an intermediate dividend better than expected.

The bank reiterated that it was on track to pay a dividend of 6.5 pence per share for 2018.

Barclays also said that the Irish central bank has given him permission to expand its Irish operations, as it transfers ownership of all its European subsidiaries to the entity prior to Brexit on 29 March.

Reporting by Lawrence White and Emma Rumney, editing by Sinead Cruise and Alexander Smith

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