Barclays Earnings: Structural Hedge and Investment Banking Shine

Barclays reported fourth-quarter profits before tax of GBP 1.66 billion, 3% ahead of consensus estimates collected by the banking group prior to the release. Income generation was strong across the board, 4% ahead of consensus. Good performances in the investment bank and private bank and wealth management segment stood out positively. We raise our fair value estimate to GBX 290 per share primarily due to lifting our net interest income and investment banking income assumptions. Since our last model update, base rate cuts by the Bank of England have been less frequent than anticipated, allowing Barclays to lock in more of its structural hedge at higher rates. This should extend the positive contribution to net interest income for longer. Our no-moat rating is unchanged.