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London Markets: Barclays' outcomes reignite curiosity in unpopular banks

A pedestrian wearing a face mask due to the COVID-19 pandemic walks past a branch of a Barclays bank in central London, England on July 29, 2020.

tolga akmen / Agence France-Presse / Getty Images

Barclays stocks rose in London on Friday and the well-received results helped highlight a sector that has largely been shunned by investors this year.

Barclays
BARC,
+ 6.96%

BCS,
+ 4.57%
It was up 6%, according to FactSet Research, setting for its best day since May 27 after the UK bank's third-quarter earnings, net income and pre-tax profit surpassed market expectations despite high provisions.

While some have criticized Barclays' presence in investment banking, "the pandemic appears to demonstrate the benefits of the diversified approach advocated by CEO Jes Staley, as that part of the group was strengthened by a surge in trading volume at a time when consumer banking is below real Pressure, ”said Russ Mold, Investment Director at AJ Bell, in a communication to clients.

And while the company is making more provision for losses on loans related to COVID-19, things looked more positive as write-offs were below the previous quarters.

Andrew Coombs and a team of analysts at Citigroup refer to a notice published on October 12th, in which they viewed the British banks contrary and indicated that they were worth buying. And while this was received with a lot of skepticism, Barclays is helping to streamline that view, the team said.

Coombs and the team rattled off Barclays' positive results: volume rebound, net interest margin stabilization, worst case depreciation and significant capital generation.

"UNITED KINGDOM. Banks are the top performing stocks in the FTSE 100 and SX7P
SX7P,
+ 2.81%
up more than 20% today and last month, ”said Citi analysts.

The well-received results from Barclays, which raised all boats, sparked profits across the banking sector. Lloyds Banking Group shares
LLOY,
+ 4.90%

LYG,
+ 3.14%
rose 5.3%, HSBC
HSBC,
+ 3.05%

HSBA,
+ 4.70%
and Standard Chartered
STAN,
+ 4.20%
each rose by 4%.

Gains in the heavily weighted banking sector drove the FTSE 100 index up 1.4%
UKX,
+ 1.29%,
that was 1.3% higher.

Read: Barclays shares rise as Covid-19 drives investment bank performance. That could be good news for the dividend.

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