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Barclays: Disappointing Quarter But Thesis Fully Intact

May 01, 2021 2:57 AM ETBarclays PLC (BCS)10 Comments
IP Banking Research profile picture
IP Banking Research


  • Headline numbers for Q1’2021 are impressive.
  • Mr. Market however is looking under the hood and is focused on the going-forward narrative.
  • The concerns are with the sustainability of investment banking revenue as well as the cost trajectory.
  • At the same time, Mr. Market overlooks the potential tailwinds.
  • I remain bullish and see the latest price action as consolidation and profit-taking.

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Photo by stockcam/iStock Unreleased via Getty Images

The Q1'2021 headline numbers for Barclays (NYSE:BCS) were impressive at a return on tangible equity (RoTCE) of 14.7 percent. This is the statutory accounting number and not an "adjusted" metric, and it wasn't flattered by massive loan loss

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IP Banking Research profile picture
Independent banking research focuses on financials, deep value, special situations, and financial arbitrage. Agnostic and apolitical approach for scouring the earth for durable and uncorrelated cashflows that work well in both inflationary and deflationary settings.See my tipranks profile below:https://www.tipranks.com/bloggers/ip-banking-researchTo benefit from independent insights and quality analysis from a banking insider - subscribe as a "real-time" follower above.

Analyst’s Disclosure: I am/we are long DB, BCS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (10)

donio profile picture
does bcs pays 10 percent for his debt(by bonds)?
catsaunders financial profile picture
We have a strong position and opinion of BCS. We think the 0.65x tangible book price is strong placing the price of BCS at ~$17 (just at this metric alone.) We believe in the thesis of a 78% upside in 2022 plus a strong and increasing dividend. NOTE: We bought and DCA $5-$10/share
Siyu LI profile picture
I agree with the IPBR rating on all 3 counts. DB/CS/BCS.
Actually BCS I don't have a strong opinion. :-)
Thanks for the article. Time to add position CS, DB, BCS,
crl1603 profile picture
Author, question if i may, which do you think has the most upside potential from here BCS or DB, and also if i may, which has the most downside protection?
Nice research
IP Banking Research profile picture
@crl1603 interesting question....as I am working on a side-by-side comparison for both. DB is just slightly ahead now...but the answer is abit more complex than that. There are overlaps in the business model but there are also differences....stay tuned.
So understood that DB fully focused on FIC was taking market shares back from Barclay's and BNP. But not only DB prospered. MS and GS too.
Think BCS and BCS were distracted by booming equities from digitalization FIC. That was a management mistake.
IP Banking Research profile picture
@blaumeise yes, the question though is how much of the BCS underperformance is attributable to DB reclaiming market share versus product mix (eg securtized versus rates). We won’t know that for sure for several quarters. There could also been some idiosyncratic trading losses. Hard to tell but need to watch this space for sure.
But saw that Barclays increased in DCM by about 40%. I understand DCM as a important input for later growth in trading revenues. A very good sign.
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