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Barclays beats estimates for third quarter with bond-trading boost

Barclays Bank building
Chris Ratcliffe | Bloomberg | Getty Images

U.K. bank Barclays reported better-than-expected pretax profit for its third quarter on Thursday, highlighting a boost for its credit business and some resilience despite uncertainty following the country's decision to leave the European Union.

Statutory group profit before tax was up 35 percent at £837 million ($1 billion) compared to the same period last year. This beat estimates in a Reuters poll for £811 million but was below the £1.27 billion reported in the last quarter. Shares of the firm were higher by 1.7 percent as the European trading session began on Thursday.

"Our core businesses are performing well, non-core rundown is approaching the final lap toward closure, we are on top of costs, and our capital position is resilient with strong reasons for confidence in meeting our end state target," Jes Staley, the group chief executive officer at Barclays, said in the earnings release.

"The growing momentum in attaining our strategic goals means we feel optimistic of our prospects of completing the restructuring of Barclays — a restructuring to a simplified transatlantic, consumer, corporate and investment bank with the capacity to deliver sustainable high-quality returns for shareholders."

It noted that its diversification had aided its balance sheet saying that the appreciation of the dollar had boosted its profits in the U.S. It gave particular reference to the boost in fixed income trading which has been a trend seen in Wall Street earnings for this quarter.

Nervous investors have flocked to bonds which are perceived as a safe haven and banks have profited as a consequence. Barclays stated Thursday that its credit business had increased 74 percent, recording its highest quarter since the first quarter of 2014, reflecting increased client activity.

It said it remained on track to close its "non-core" in 2017 with strong progress on business disposals. It also announced it was on track to sell down its stake in is African unit. Meanwhile, it also announced a fresh £600 million charge for the mis-selling of payment protection insurance (PPI), an ongoing scandal in the U.K. that has involved several banks over many years.

"Barclays' third quarter results are a bit of a curate's egg, the top line in its core business is growing, but profits have been pegged back by one-off items. However, in the banking world, those one-off items do have a tendency to recur over and over again," Laith Khalaf, a senior analyst at Hargreaves Lansdown, said in a research note.

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