BCS - Barclays stock slides as net interest margin comes under pressure

2023-07-27 11:51:16 ET

Barclays ( NYSE: BCS ) stock fell 7.0% in midday trading on Thursday after the U.K.-based bank said its net interest margin is being pressured by lower expected deposits and deposit repricing.

The bank's current view for NIM stands at ~3.15% compared with its guidance for 2023 NIM of less than 3.2%.

More persistent inflation, higher base rate interest expectations, and increased swap rates are driving changes in customer behavior, management said in the company's earnings call. Specifically, customers are using surplus deposits to pay down debt and manage expenses while seeking higher yields on their savings, it said.

Barclays ( BCS ) Q2 profit before tax fell to £1.96B from £2.60B in the prior quarter and increased from £1.50B in the year-ago period. EPS of 8.6p fell from 11.3p in Q1 and increased from 6.4p in Q2 2022. Group attributable profit was £1.3B, up 24% Y/Y.

Q2 net interest income of £3.27B increased from £3.05B in Q1 and £2.42B in Q2 2022.

Deposits at amortized cost slipped to £555M from $556M in Q1.

Total assets to £1.55T increased from £1.54T in Q1.

Q2 return on tangible shareholders' equity slipped to 11.4% from 15.0% in the prior quarter, and increased from 8.7% in the year-ago period.

More on Barclays:

• Barclays reports 1H results
• Barclays: 6% Dividend Yield and Undervalued, But Waiting on Next Dip
• Warning: BCS is at high risk of cutting its dividend
• A look at Barclays' previous income statements

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