Barclays' Earnings: Jolly Good

While American investors paid homage to their presidents on Monday, British investors rallied behind Barclays (NYSE: BCS  ) for an 8% gain. The boost was in part a reaction to the British government's decision to nationalize troubled mortgage lender Northern Rock. But Barclays itself didn't disappoint with its year-end numbers, and in response, the bank's U.S. shares closed up nearly 10% yesterday, prompting at least a few investors to consider enjoying an extra biscuit with their tea.

Barclays reported earnings in-line with analyst expectations, with a net gain for the year of $8.7 billion, or just 3% below 2006 results. At just $3.2 billion for the year, mortgage-related losses were much milder for Barclays than for global competitors such as Citigroup (NYSE: C  ) and Merrill Lynch (NYSE: MER  ) .

In what was perhaps an expression of that famous British grit, the remainder of Barclays' statements painted a truly rosy picture going forward. Offering guidance that targets 5%-10% annual growth for Barclays through 2011, the bank's president is calling for a "shorter and shallower" slowdown in the U.S. economy than many are fearing. Barclays also decided to put its money where its mouth is and further tempted investors with about a 10% bump in its already substantial dividend yield.

On the strategic front, Barclays appears intent on restoring the empire. Yesterday, the bank announced its intention to pursue growth in the U.S. market while its would-be competitors are struggling. Just last week, Barclays was reportedly in talks to acquire a controlling stake in Russia's Expobank.

To date, Barclays has done an impressive job of minimizing its losses from the U.S. mortgage crisis, through a combination of hedge positions, injections of foreign capital, and continued growth in retail banking and credit card operations. Whether investors reap further rewards will depend on the accuracy of Barclays' outlook for the U.S. economy, the long-term stabilization of the global credit markets, and the resilience of Barclays' remaining portfolio of $19 billion in collateralized debt obligations and subprime mortgage debt. But only time will tell.

Further Foolishness:

Read/Post Comments (0) | Recommend This Article (9)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 581157, ~/Articles/ArticleHandler.aspx, 10/26/2016 11:12:43 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 hour ago Sponsored by:
DOW 18,199.33 30.06 0.17%
S&P 500 2,139.43 -3.73 -0.17%
NASD 5,250.27 -33.13 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/26/2016 4:04 PM
BCS $8.85 Down -0.05 -0.56%
Barclays CAPS Rating: ****
C $50.01 Up +0.42 +0.85%
Citigroup CAPS Rating: ***
MER.DL2 $11.64 Down +0.00 +0.00%
Merrill Lynch & Co… CAPS Rating: *