Barclays Earnings: First Steps on New Strategic Path; Continued Deposit Outflows

Barclays reported first-quarter profit before tax of GBP 2.3 billion, nearly 4% ahead of consensus estimates collected by the bank prior to the release. During the quarter, Barclays took its first steps on its new strategic path, which it believes can achieve structurally higher profitability. Of the GBP 1 billion in gross cost savings slated for 2024, the UK banking group achieved GBP 0.2 billion in the first quarter, getting off to a decent start. During the quarter, it also announced the acquisition of the Tesco retail banking business, the sale of its performing Italian mortgage book portfolio, as well as the sale of $1.1 billion in US credit card receivables. Operationally, performance was decent in the quarter. Barclays posted a return on tangible equity of 12.3%, ahead of its above 10% guidance for 2024. Compared with the quarter a year ago, traction across most business units slowed, which was, however, within expectations. We maintain our GBX 210 per share fair value estimate and no-moat rating.