By Barclays, the British bank, has adjusted its U.K. net interest margin guidance for 2023 and has experienced lower-than-expected growth in income during the third quarter. Income from its corporate and investment bank also fell short of expectations.
New Net Interest Margin Projection
Barclays now expects a net interest margin for Barclays UK between 3.05% and 3.10% for the year, a reduction from its previous projection. In July, the bank had lowered its 2023 margin guidance to a maximum of 3.20%, with an anticipated margin of around 3.15%.
Factors Contributing to the Change
The lender attributes the adjustment to ongoing challenges in the market, including changes in customer behavior resulting in a decrease in net interest margin outlook and balances. Continuing product dynamics, such as lower deposit volumes and mortgage margin pressure, have partially offset net interest income growth from higher rates.
Third-Quarter Performance
Barclays reported a U.K. net interest margin of 3.04% for the three months ending September 30, down from 3.22% in the second quarter. The decline was mainly driven by lower client activity and a decreased banking industry fee pool in the international division’s corporate and investment bank. Corporate income gains from higher rates were wiped out as a result.
Total income for the entire group in the quarter amounted to £6.26 billion ($7.66 billion), compared to £5.95 billion the previous year. Pretax profit stood at £1.885 billion, slightly lower than the £1.97 billion recorded in the same period last year.
Potential Cost-Cutting Measures
In light of the financial performance, Barclays is considering cost-cutting actions that could result in additional charges during the fourth quarter. The bank aims to enhance returns for its shareholders through improved cost efficiencies and disciplined capital allocation across the group.
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