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Barclays’ profits boosted by surge in investment banking fees

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Barclays kicks off UK bank reporting season today. Investment banking has been booming amid a dealmaking frenzy, and Barclays has unsurprisingly benefited from that.

The group reported third-quarter net income of £1.45bn, up from £611m last year. Return on tangible equity for the quarter was 11.9 per cent.

Barclays results were also helped by lower loan loss provisions than a year ago. But the big star was investment banking, which reported almost £1bn in fees.

While the investment bank was responsible for much of Barclays strength, boss Jes Staley said the bank was also “seeing evidence of a consumer recovery and the early signs of a more favourable rate environment”. Lower unsecured loan balances — as consumers have repaid borrowing during the pandemic — have weighed on net interest margins despite a booming mortgage market.

Do let me know what you think of the newsletter and what I can do better. Email me at citybulletin@ft.com.

Briefly

The latest public sector finances data show state borrowing was lower than expected in September, giving Chancellor Rishi Sunak more flexibility for his Budget next week. Public sector net borrowing was estimated to have been £21.8bn in September, £7bn less than a year earlier.

Unilever said that cost inflation “remains at strongly elevated levels”, a trend that would continue into next year. The consumer goods group reported underlying sales growth for the third quarter of 2.5 per cent, but that increase was all due to price rises made to offset rising commodity and other input costs. Prices increased by 4.1 per cent whereas volumes were 1.5 per cent lower, the company said.

Public transport operator FirstGroup has finally sold Greyhound buses after several years of trying. It will receive $172m for the business from Germany’s FlixMobility, $140m of which will be paid upfront.

Also out today are updates from St James’s Place, AJ Bell and Relx.

Beyond the Square Mile

PayPal, the online payments group, is in talks to buy social media group Pinterest in a deal that would be worth around $45bn. Our US deals team reports on how PayPal has been using its strong stock price to buy up businesses in a bid to become a super app along the lines of China’s WeChat, which combines payments and a social media platform.

Shares in China Evergrande fell sharply after the end of a two-week trading suspension. Evergrande’s Hong Kong-listed stock fell almost 14 per cent after the Chinese real estate developer said a plan to sell its property services division had collapsed.

And Donald Trump is launching a social media platform called TRUTH Social, which will list through a merger with a blank cheque company. Trump was banned from many of the big social media platforms in the wake of the January 6 attack on the US Capitol. But while the TRUTH Social app can be pre-ordered on Apple’s App Store, it won’t be released until next year.

Essential comment before you go

Read my column! This week it’s on why Deliveroo’s IPO might not have been as much of a dud as it seemed.

Then once you’ve read that, settle down to read this magazine piece by chief FT features writer Henry Mance who goes “Inside the John Lewis nightmare”.

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