Where next for Barclays stock ahead of Q1 2022 earnings?

When will Barclays report Q1 results?

Barclays will report Q1 results on Thursday, 28^th April, before the market open.

What to expect?

Barclays is set to post a 2.8% fall in income to £5.7 billion, while pre-tax profits are expected to tank 39% to £1.5 billion.

End of investment banking boom

Barclays is the only UK bank with a significant presence in the investment banking sector. As we know from US bank’s earnings, investment banking was dealt a heavy blow as geopolitical risks sparked by the Russian war created an uncertain environment with listings, raising money on the financial markets, and deal-making cooling significantly, particularly compared to the previous year’s deal-making boom. This is likely to drag on Barclays’ earnings.

NII

Barclays and its peers are expected to benefit from the higher interest rate environment. The BoE has hiked rates across the past three meetings. Barclays has said that it expects net interest margin to improve to 2.6% - 2.7% in 2022, up from 2.52% in 2021

While part of the increase in NIM is owing to rising rates, it is also thanks to the bank having a good handle on costs, seen in the final quarter of 2021. Barclays has warned that costs could creep up this year as inflation rises. Investors will be keeping an eye on costs.

Bad loan provisions

Last year the banks were optimistic about the outlook amid a rebound in economic growth and as interest rates started to rise from record lows. The banks began releasing reserves that had been set aside in the pandemic for bad loans, which never materialized. The release of these loans boosted earnings. The outlook is very different with the Russian war sending energy and food prices soaring, central banks raising interest rates threatening to tip the economy into recession. The outlook is much darker now than a year earlier. Barclays is expected to put aside £299 million for potential defaults, up from £55 million a year earlier when an economic boom was expected.

Regulatory hit

Barclay’s earnings come just a month after the bank warned that it faces around a £450 million loss and regulatory scrutiny for going $15.2 billion above its US limit on sales of structured products. The bank then was forced to buy back the notes incurring a heavy loss.

Following the discovery, Barclays postponed its £1 billion buyback until Q2.

EM trading

Ahead of the quarterly update, and on a brighter note, reports emerged at the start of the week that Barclays has been benefitting from an increase in emerging market trading volatility, with EM trading & credit desk revenue expected to be around £600 million, up firmly from £400 million in the previous quarter. This could go at least some away to offsetting

Where next for Barclays share price?

Barclays trades down 33% from its 2022 high of 214p. The share price has trended lower across the year to date, forming a series of lower highs and lower lows. It trades below its 2-month declining trendline and below the 50 & 100 sma. The 50 SMA has also crossed below the 100 sna in a bearish signal.

The RSI remains in bearish territory and is about the cross below its 14-day moving average, suggesting that could be more weakness to come.

140p, a more than two-year low, offered support earlier this month and is the level the bears will need to break below before bringing 125p, the 2021 low, into play.

Meanwhile, buyers will need to rise above the falling trendline resistance at 147p and last week’s high of 150p, which could help to create a higher high and expose the 50 SMA at 163p.

How to trade with City Index

Follow these easy steps to start trading with City Index today:

Open a City Index account, or log-in if you’re already a customer.
Search for the market you want to trade in our award-winning platform.
Choose your position and size, and your stop and limit levels
Place the trade.

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.