Please ensure Javascript is enabled for purposes of website accessibility

Barclays' Juggernaut Keeps Rolling

By Nate Parmelee – Updated Nov 15, 2016 at 12:03AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Barclays' fee businesses continue to power growth.

Barclays (NYSE:BCS) is a powerhouse of a bank. The fiscal 2006 results it released earlier this week confirm it.

For the year, Barclays drove every financial metric higher. Total income was up 25%, profit before tax rose 35%, and earnings per diluted share were up 33% to 69.8p ($1.33). This performance allowed the company to earn a 25% return on equity and boost its dividend by 17%, to 31p ($0.59) per share.

The standout performers in the company's business continued to be the capital, global investors, wealth management, international retail, and commercial banking businesses; profit before tax was up 28% or more at each division. The company's retail banking business, which has traditionally been a bit of a laggard, posted a 17% gain on profit before tax, which is not at all shabby by any standards.

The blemish on the performance was the company's credit card business, which posted a 40% decline in profit before tax. This is largely because of impaired accounts that had to be charged off, and is a continuation of the struggles in this business. However, it is still a large business for Barclays and a strong franchise for the company in the U.K. The company has seen delinquent accounts decline and believes that the second half of 2006 marked the bottom for this business.

Like its peer Lloyds TSB Group (NYSE:LYG), Barclays has had a nice run over the last year or so. Both Lloyds and Barclays have outperformed behemoth HSBC (NYSE:HBC), which is now struggling with problems of its own from investments in subprime mortgage debt in the United States. Despite Barclays' size, it's also displaying far more rapid growth than large U.S. banks such as Citigroup (NYSE:C) or Bank of America (NYSE:BAC), which at one point was rumored to have an interest in acquiring Barclays.

(Side note: I can see no reason Barclays would be interested in tying up with Bank of America, but I can see why Bank of America would be interested.)

Like my colleague, Will Frankenhoff, I am slightly in awe of how well Barclays has performed. But I also think there is likely to be more good news to come from Barclays in the future, simply because it has so many strong franchises with years of potential growth in front of them. That's not to say there won't be some bumps in the road along the way, because the shares have had quite a run, but long-term, things look very good for Barclays.

Interested in learning more about companies that do the bulk of their business outside the United States? Take a free trial of our new international investing service, Global Gains.

At the time of publication, Nathan Parmelee had no financial interest in any of the companies mentioned. Bank of America is a Motley Fool Income Investor selection, and Lloyds TSB is a Motley Fool Inside Value pick. The Motley Fool has an ironclad disclosure policy.

None

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Barclays PLC Stock Quote
Barclays PLC
BCS
$7.08 (-5.98%) $0.45
Citigroup Inc. Stock Quote
Citigroup Inc.
C
$44.26 (-2.90%) $-1.32
Bank of America Corporation Stock Quote
Bank of America Corporation
BAC
$31.73 (-2.37%) $0.77
HSBC Holdings plc Stock Quote
HSBC Holdings plc
HSBC
$28.16 (-3.63%) $-1.06
Lloyds Banking Group plc Stock Quote
Lloyds Banking Group plc
LYG
$1.96 (-7.11%) $0.15

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.