Barclays reported a 12% rise in pre-tax profits for the third quarter, reaching £2.3 billion. This is an increase from £2.1 billion during the same period last year. The bank is preparing for a likely rise in UK bank taxes. It is also returning £500 million to shareholders through a buyback. This brings the total returned since January to £2.8 billion.
Job Cuts Driven by AI
Barclays plans to cut 5,000 jobs as part of a cost-cutting effort. This represents about 5% of its global workforce of 93,000. Chief Financial Officer Anna Cross said that 1,000 of these cuts have already happened. The remaining 4,000 cuts are expected to be completed by the end of the year. Most of the cuts, about 60%, will affect support roles. Chief Executive C.S. Venkatakrishnan noted that advances in artificial intelligence are driving efficiency. This has helped the bank improve its cost-to-income ratio from 63% to 62%.
Rising Tax Concerns
The profit increase comes as the UK government, led by Chancellor John Healey, prepares to announce a new budget on October 28. This budget is expected to include a tax increase on banks. The Trades Union Congress (TUC) has urged banks to contribute more to public finances. They argue that banks' recent profits have come amid significant financial strain on households. TUC General Secretary Paul Nowak stated, "Barclays’ bumper profits aren’t an anomaly… it’s time for banks to pay a fairer share."
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The expected rise in bank taxes could impact the profitability of UK banks, including Barclays. This may lead to lower returns for investors. The banking sector could face more scrutiny as public sentiment shifts towards demanding higher contributions from financial institutions. Watch for the upcoming budget announcement on October 28, which will outline the new tax measures for banks.
Based on reporting by: theguardian.com