By Dhirendra Tripathi
Investing.com – ADRs of Barclays (NYSE:BCS) traded 3.5% higher in premarket Wednesday after the lender reported its highest ever annual profit, riding the demand for its investment banking and merger advisory services.
Adding to the gains in the stock is its decision to buy back 1 billion pounds ($1.36 billion) of its own shares and pay out a full-year dividend of 4 pence per share, resulting in a total payout for the year of 2.5 billion pounds ($3.4 billion) when added to earlier payouts.
Fourth quarter income from capital markets and merger advisory services rose 27% to 956 million pounds as companies, flush with cash, looked to buy others to fill gaps or expand into new geographies.
Quarterly profit attributable to Barclays shareholders jumped more than five-fold to 1.1 billion pounds ($1.5 billion). Barclays, like rival HSBC (NYSE:HSBC) and American banks like JPMorgan (NYSE:JPM) and Goldman Sachs (NYSE:GS), benefited from an improving economic climate. As asset quality improved, it released more funds it had kept as reserves to fight contingencies. HSBC Tuesday reported a quarterly profit of $2 billion for its recent quarter.
Revenue from fixed income trading plunged by 33%, driven by rising government bond yields. Equities revenue fell 8% in a volatile fourth quarter for the markets.
This was C.S. Venkatakrishnan’s first quarterly result as the CEO of the bank and he said he will continue his predecessor Jes Staley’s focus on expanding the investment banking services, according to Reuters.
He listed digitization projects such as a 'buy now, pay later' consumer finance offering with Amazon (NASDAQ:AMZN) in Britain and Germany, and transitioning to a low carbon economy as his other priorities.
Echoing rivals Natwest (NYSE:NWG) and HSBC, Barclays also warned of inflationary pressures in the current year.