We’re heading further into results season for companies with years ending December 2013, and Tuesday 11 February will see full-year figures from Barclays (LSE: BARC) (NYSE: BCS.US).
Despite recovering from the 2009 dip pretty promptly, Barclays shares have foundered over the past 12 months. We’ve seen zero change during a period in which the FTSE managed a rise of around 5% — and Barclays’ expected dividend yield, at just 2.4%, is below average too.
Turnaround?
But forecasts for the coming year and 2015 suggest we could be at a turnaround time, with analysts predicting a rise in earnings per share (EPS) of 25% this year and 20% next. That would drop the bank’s price-to-earnings ratio (P/E) from about 11.5 based on 2013 forecasts to 7.7 — and that prompted me to consider Barclays as a possible investment for the Fool’s Beginners Portfolio recently.
But that’s getting ahead of ourselves a little, so what does 2013 have in store? Well, despite a very low statutory pre-tax profit of £246m (down from £5,879m the year before), Barclays laid claim to an adjusted figure of £7,048m — which is getting back up to pre-crash levels.
New chief executive Antony Jenkins told us at the time that “we must also improve our financial position further — despite improvement year on year, our return on equity is not yet at an acceptable level“. And in response to the outcry over “fat cat” bankers’ bonuses, he also told us that firm’s compensation ratio is coming down — it dropped to 38% from 42% a year previously, and there’s apparently a long-term target of “mid-30s“.
What’s the consensus?
The City is forecasting pre-tax profit for 2013 of £6,665m, rising to £9,562m by 2015, though for the year just finished there’s an EPS fall of about 25% predicted. Barclays’ total dividend for the year is expected to be lifted by 8% to yield that 2.4% — not great yet, but continuing the strong recovery trend since the annual payout was slashed in 2009.
But what does Barclays itself think? Well, at third-quarter time Mr Jenkins was upbeat about the bank’s progress in reducing its leverage and in getting its risky assets down.
Adjusted pre-tax profit was down 20% to £4,976m, in large part due to £741m having been ploughed into the bank’s Transform programme, but contributed to by a fall in Investment Bank income as asset disposals continued. Average return on equity dropped to 7.1% from 9.7%, again due to Transform costs.
Earnings fall
Earnings per share fell 29% to 21.9p, and the bank announced a third quarterly dividend of 1p to take the total so far to 3p per share — at this stage, that’s no change from the year before.
All in all, it seems likely that next Tuesday’s results won’t be far away from the current consensus.
