Barclays (BARC), Antofagasta (ANTO), Mobico (MCG) and Plus500 (PLUS)
The positive reception for the Barclays (BARC) annual results had less to do with the numbers themselves – profits before impairments were largely static at £8.43bn – and more with the first real statement of strategy from the management on how the bank will approach the next three years. In response, the shares rose by 5 per cent.
The approach appears to be to pay shareholders a total of £10bn in capital over the next three years through dividends and buybacks and to keep costs nailed down as much as possible. To achieve this Barclays must stick to a tight-looking total cost ratio of 63 per cent. Operating costs were nearly £2bn higher at £16.7bn. Key to achieving the savings necessary to keep within those limits is the reorganisation of Barclays’ corporate structures at an initial cost of £0.9bn.
The bank has clearly decided to focus its efforts on its UK retail banking business. In March, it completed the buyout of KMC Mortgages, bringing £2.2bn of mortgages onto the books. The consumer business was further strengthened by the recent £700mn buyout of Tesco Bank. Despite the success of retail banking in the UK, the outsized, and underperforming, investment bank has dampened overall performance. JH.
Read more: Are bank shares still worth owning?
Growth pivot for Anto brings balance sheet questions
Antofagasta (ANTO) hit forecasts for 2023 earnings but has once again cut the dividend. The Chilean copper miner reported a cash profit of $3.1bn (£2.5bn) for 2023, a 5 per cent increase on 2022, and will pay out 50 per cent of underlying earnings as a dividend, or 36¢ a share. This is down 40 per cent on 2022, and is a quarter of the total dividend for 2021, when costs were lower and the copper price high.
“Higher net debt meant the dividend surprised us, particularly given the heavy capex spending likely in the next few years,” said Peel Hunt analyst Peter Mallin-Jones. Net debt was $1.1bn, against Peel Hunt’s forecast of $900mn. This jump was because of dividends paid out to minority owners of Antofagasta mines. The company’s shares were up 3 per cent on the results, compared with drops for BHP (BHP), Rio Tinto (RIO) and Glencore (GLEN) this morning. AH
Read more: Can mining stocks repeat the 2010s superboom?
Plus500 makes progress despite quiet markets
Plus500 (PLUS) made strides towards the completion of its three strategic objectives through 2023, although the pressure on earnings and underlying margins that were evident at the half-year mark persisted through the reminder of the year.
Management said that results were “significantly ahead” of market expectations “despite lower levels of trading activity across global financial markets during the year”. Indeed, the CBOE Volatility Index (VIX), a standard measure for tracking volatility, dropped to four-year lows in December, providing a stark contrast to events in the prior year.
The reduced trading activity translated into a 25 per cent drop in cash profits to $341mn (£271mn) with the underlying margin shrinking by eight percentage points to 47 per cent. but shareholders can take solace in the group’s operational performance, along with an additional $100mn in share buybacks and a special dividend of 55.5ȼ a share. MR
Read more: Financial services companies still impacted by high rates
