Barclays Reports Good Fourth Quarter as the Investment Bank Continues to Perform Well

No-moat Barclays reported fourth-quarter profits before tax of GBP 1,474 million versus GBP 646 million a year ago. If we clean the results for volatile credit impairments and releases, profits before tax were still up a respectable 12%. Income at its corporate and investment bank continued to normalise with FICC and equities income down 33% and 8% respectively year over year, while advisory and equity capital and debt capital markets fees continued to perform strongly. Barclays U.K. performed well, with income up 5% to GBP 1,699 million. Over the next year, the net interest margin is expected to increase to between 2.6% and 2.7% from 2.5% at the end of the last quarter, providing a tailwind through the year in the U.K. business. At group level, operating costs were up slightly (1%) on higher structural cost actions in the U.K. business and investments in business growth. Inflationary pressures are expected to drive base costs up during 2022, although Barclays should be able to offset some of the increase with efficiency savings. We maintain our fair value estimate of GBX 185 per share.