So, bad debts and fraud investigations, why buy bank shares?
Ian Gordon at Investec admits the case is tricky to make, though they have gone up since Christmas.
He says: “The challenge for all the large banks is that in a ‘zero forever’ interest rate environment, revenues will remain under pressure and so the idea of (ever) getting back to double-digit returns on equity is a pipe dream. Bank shares have rallied recently because markets have dared to dream that interest rates will rise again.”
Barclays is slightly a wild card compared to Lloyds and NatWest since it has a strong investment banking arm that might have offset the weak UK high street numbers.
Analysts aren’t expecting fireworks from the Wall Street arm of Barclays this quarter, but they’ve been wrong before.
More likely is that the banks will try to put a positive gloss on some fairly weak numbers, while pointing to their financial strength, if only to keep the Bank of England happy and allow future dividend payments to roll out.
The Bank, via the Prudential Regulation Authority, has at least green lighted the payment of some divis, albeit with an eye on prudence.
The City thinks Barclays will pay out 3.5p a share in dividends this year, roughly a third of what it managed pre-pandemic. Can it get back to more healthy payouts soon?
