Barclays Q4 preview: Where next for the Barclays share price?

When will Barclays release Q4 earnings?

Barclays will report fourth quarter and full year 2022 earnings on the morning of Wednesday February 15. A conference call will be held on the same day at 0930 GMT.

Barclays Q4 earnings consensus

Barclays is forecast to report a 15.6% year-on-year rise in fourth-quarter income to £6.0 billion and pretax profit is expected to fall 2.5% to £1.4 billion.

If achieved, that puts the bank on course to report a 14% rise in annual income to £25.1 billion and a 16% drop in annual profits to £7.0 billion in 2022.  

Barclays Q4 earnings preview

Net interest income is forecast to rise 38% from last year in the fourth quarter to £3.1 billion, with potential for its margin to climb to 4% as higher interest rates continue to feed through.

Its trading arm should provide a strong set of results. Revenue from fixed income is expected to be up 82% in the fourth quarter, accompanied by a milder 6.3% rise from equities.

That will be countered by lower fees that Barclays earns from providing advisory services and helping companies raise cash. Banking fees are forecast to be down over 45% this quarter as fewer companies raise funding or find deals because of the uncertain economic outlook.

Investors and analysts may zero-in on the investment bank following a shake-up of senior management in recent weeks. We may also see questions raised by a report from the Financial Times last week that said Barclays is being investigated over its anti-money laundering systems by the Financial Conduct Authority.

Barclays is expected to continue releasing reserves, by around £466 million in the fourth quarter, that had been put aside during the pandemic to bolster its bottom-line.

However, profits are under pressure across the banking industry from rising costs, which are forecast to be up 9.6% in the final quarter at £4.1 billion. Barclays has said expenses should amount to around £16.7 billion over the full year and markets think they will be slightly higher at £16.8 billion – some 16% higher than what we saw in 2021. The outlook for 2023 will be influential and costs will be a central focus. Markets have pencilled in a 4% drop in expenses this year, partly funded by bonus cuts and a steep drop in litigation charges. A beat here would be bullish for the stock, while a miss would likely hurt earnings estimates and be a negative for the bank.

The other area where there is potential surprise is buybacks. Barclays continues to enjoy a resilient capital position with its CET1 ratio set to remain at the upper-end of its 13% to 14% target range in 2023. However, Barclays may choose to wait before returning any more cash through buybacks until the economic landscape becomes clearer.

Where next for the Barclays share price?

Barclays shares have soared over 38% since bottoming-out last October, but have lost some momentum since hitting a one-year high on Thursday last week.

Notably, we saw over 157 million shares traded on that day – over six times above the 100-day average – and yet we saw the stock end the day largely where it began. That suggests 189.70p could emerge as a strong ceiling. Any move above here could pave the way for a return above 197p. The 21 brokers that cover Barclays have an average target price of 247.88p, implying there is almost 33% potential upside from current levels.

The stock could slide back toward 174p if it comes under pressure, in-line with the level of resistance we saw throughout 2022. The 50-day moving average should hold considering the stock has remained above here for three months.

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