The British lender reports pre-tax profit for the July-September period of £2.2 billion, up from £1.9 billion a year ago.

Barclays reported a forecast-beating 18 per cent rise in third-quarter profit on Thursday (Oct 24), as slower than expected interest rate cuts and upbeat investment banking prospects helped it raise its income outlook for the year.

The buoyant earnings performance shows early promise for Barclays in its challenge, along with European rivals, to sustain earnings even as interest rates fall.

Barclays said it now forecasts three Bank of England rate cuts this year to a final policy rate of 4.5 per cent, having previously forecast five cuts and a final rate of 4 per cent.

The British bank’s pre-tax profit for the July-September period was £2.2 billion, up from £1.9 billion a year ago and higher than the average of analysts’ forecasts of £2 billion.

Barclays upgraded its forecast for net interest income for the year, saying it now expects to exceed £11 billion rather than just hit that target.

Barclays’ domestic corporate and consumer lending business once again performed well, vindicating a drive to invest in the division, with the £600 million acquisition of Tesco’s banking arm in February.

The unit’s third-quarter return on tangible equity, a closely watched measure of performance, rose to 23.4 per cent from 21 per cent a year ago.

Barclays said third-quarter income in its investment bank rose 6 per cent year on year (yoy), a strong performance that exceeded expectations as corporate fundraising and dealmaking increased and equities trading was boosted by the bullish stock market.

At Barclays, third-quarter fixed income, currencies and commodities and equities revenue both rose 3 per cent yoy to £1.18 billion and £692 million, respectively.

Advisory fee income surged 133 per cent to £186 million while fees generated in the bank’s debt capital markets business rose 48 per cent yoy to £344 million.

Equity fundraising income came in at £64 million – 3 per cent higher yoy but almost half the income was reported in the second quarter of 2024.

“In investment banking we’re up 67 per cent in dollars, which measures very well against our US peers … and we’re up 7 per cent in dollars in markets,” Cross said.