Barclays swings to profit with 3rd-quarter earnings, beating expectations as UK consumer business picks up

• Barclays reported third-quarter profit of £610 million ($796 million), compared with forecasts for £201 million ($262 million) and versus a loss £292 million ($381 million) in Q3 2019.
• Britain's second-biggest lender set aside £608 million ($794 million) in the third quarter for bad loans, down from the £1.6 billion ($2.1 billion) in the previous quarter, thanks in part to an improvement in its UK consumer business.
• "We expect the impairment charge in the second half of the year to be materially lower than the first half," CEO Jess Staley said.

Barclays reported a return to profit in the third quarter of the year on Friday, beating analyst expectations, after an improvement in its lending business allowed it to set aside less cash to deal with bad loans than it had earlier in the year.

Barclays recorded a profit of £610 million ($796 million) in the third quarter, up from a loss of £292 million ($381 million) in the third quarter of 2019 and above a consensus forecast compiled by the bank for a profit of £201 million ($262 million).

Britain's second-largest lender said it had set aside £4.3 billion ($5.6 billion) for bad loans. Barclays had already put aside £3.7 billion ($4.83 billion) in the first half of this year and said added an additional £608 million in the third quarter, down from the £1.6 billion ($2.1 billion) it allocated in the second quarter of this year.

"Our impairment charges now total £4.3 billion ($5.61 billion), with an additional £608 million ($794 million) taken in Q3 20, a figure down 63% on the previous quarter," Barclays chief executive Jes Staley said in a statement. "We expect the impairment charge in the second half of the year to be materially lower than the first half."

For the first nine months of the year, profits fell to £1.306 billion ($1.701 billion) from £1.78 billion in the same period in 2019, the bank said.

Barclays shares surged by as much as 7.9% to £1.124 in London, compared with a 3.1% gain in the broader European banking sector.

Below are the key numbers for Barclays 3rd-quarter earnings:

• Profit attributable to shareholders: £610 million ($796 million) compared with forecasts for £201 million ($262 million) and versus a loss £292 million ($381 million) in Q3 2019.
• Profit after tax: £819 million ($1.069 billion) versus estimates for a profit of £419 million ($547 million) and with a loss of £23 million ($30 million) in Q3 2019.
• Credit impairment charge: £608 million ($794 million), compared with £1.6 billion ($2.1 billion) in Q2.

The UK economy has been one of the hardest hit in Europe by the pandemic, having suffered the highest death rate in the region so far and one of the worst losses in GDP, leaving banks to struggle with rising unemployment and corporate bankruptcies among their customers.

Barclays said its UK division had returned to profitability in the third quarter, with pre-tax profit £196 million ($255 million), as economic activity recovered from the spring low point and impairment charges reduced.

Income from the bank's investment banking division rose 24% to £9.8 billion ($12.7 billion) in the quarter, with markets income up 52%. Pre-tax profit rose 25% to £3.2 billion ($4.2 billion), roundly beating expectations for profit of £580 million ($757 million).