The UK’s economy has been at gunpoint ever since the Brexit issue came around. Besides, uncertainty around the US-China trade war has only added fuel to the fire, sending global financial markets tumbling over the past few months.
The choice of a business sector to invest in can be rather difficult, taking into account the global economic and political turbulence. Many tend to stick to the banking industry, referring to it as one of the few safe havens remained today.
Presently, Barclays is one of the biggest financial institutions in the UK, with revenue of over £21.136 billion in 2018. To figure out whether it is the right time to invest in Barclays shares, in this article, we cover the company’s basics, take a look at its recent performance and check out what the latest Barclays share forecast looks like.
Let’s find out – what are the Barclays shares: buy or sell?
What is Barclays?
The UK’s retail banking industry has experienced many changes since the financial crisis of 2008. The majority of these were made to improve the customers’ banking experience and regain their trust.
Today, the country’s banking sector remains the largest in Europe and the fourth-largest worldwide, including more than 300 banks and 45 building societies. The so-called Big Four Banks, comprising HSBC, Barclays, Lloyds Banking Group and Royal Bank of Scotland, manage over 75% of all British private accounts and 85% of business accounts — a total of about £5 trillion in assets — and employ more than 560,000 people.
Trade Barclays PLC - BARC CFD
Barclays plc is a world-renowned British multinational investment bank and financial services company engaged in retail, corporate and investment banking, credit cards and wealth management services.
The company operates through two key divisions: Barclays UK and Barclays International. The first one, headquartered in London, includes the UK retail banking operations, UK wealth management business, UK consumer credit card business and corporate banking for smaller businesses. The latter, headquartered in New York, includes the US and international cards business, the corporate banking franchise, the investment bank and international wealth management.
Tracing its roots back to 1690, Barclays grew to become a nationwide bank. Throughout its history, it has made numerous acquisitions, including the London, Provincial and South Western Bank in 1918, British Linen Bank in 1919, Mercantile Credit in 1975, the Woolwich in 2000, the North American operations of Lehman Brothers in 2008 and ING Direct UK in 2012.
Today, Barclays plc can boast of an extensive international presence, including operations in Europe, North America, Asia, Africa and the Middle East. It employs almost 80,000 people and serves more than 48 million customers worldwide.
The company’s shares are traded on the London Stock Exchange under the ticker symbol BARC and on the New York Stock Exchange under the ticker symbol BCS. As of September 24, 2019, Barclays plc is a constituent of the FTSE 100 Index and is the 22nd largest company in the index, with a market capitalisation of around £25.386 billion.
Barclays share price: latest news and performance in the first half of 2019
The Barclays share price has been slowly but surely declining for the past two years, losing around 25% of its value in total. At the end of July 2019, the company’s shares traded at 154.1p.
However, half-year results announced on August 1 saw the shares surge 1.2% on the day to 155.9p. Unfortunately, the upside momentum was short-lived, and the share price fell once again to finish the month at 136.6p.
Barclays reported a net profit of £1.03 billion in Q2, compared to £1.2 billion in the same period a year earlier. Analysts polled by Reuters expected these figures to set around £988.87 million.
Total income of £5.54 billion for the quarter was 3% above the City consensus. However, the increase was possible only due to a capital gain from the sale of a stake in Tradeweb, a bond platform. Underlying operating profit of £1.58 billion was in line with expectations, as costs were 6% higher than analysts predicted.
The company’s other quality and profitability metrics improved remarkably in the first half of the year. Group return on tangible equity was 9.3%. Considering its strong position and increasing profits, the British bank decided to increase its dividend payment by 20% year-on-year to 3p per share. It was stated the business expects the full-year dividend to be around three times that number.
First and foremost, ongoing Brexit anxiety throws a shadow over the entire UK economy and casts a particularly gloomy cloud over the banking segment. In addition to the risk of a no-deal Brexit, possible negative interest rates also pose a danger on the industry. Amid the uncertainty, shares of the five FTSE 100 banks all posted bigger falls in August than the 5% drop of the index.
Therefore, Brexit uncertainty, along with a worldwide economic slowdown, low interest rates and tightening regulations, has played its part in posing downward pressure on the Barclays share price.
As it’s hard to predict what form Brexit will take, it remains the big unknown that’s overhanging the Barclays share price forecast.
Barclays share price forecast: what will happen next?
Due to the global political and economic uncertainty, it may be rather hard to guess what Barclays share forecast will look like tomorrow.
Below, we gathered some analysts’ predictions to answer the question: will Barclays shares recover any time soon?
According to a popular forecasting source, Pound Forecast, the stock is expected to trade at 114.26p by July 2021.
This is what their Barclays share price prediction looks like until September 2021:
Analysts at Wallet Investor have also taken a bearish stance, referring to the company's stock as a potentially “bad, high-risk 1-year investment option”. Considering their forecast, your current investment into Barclays may be devalued in the near future.
Hargreaves Lansdown, a UK-based financial service company, has provided the latest broker views of the Barclays outlook:
In the coming months and years, the Barclays share price forecast is expected to continue to be affected by a number of political and economic developments in the UK and worldwide. If you think you are not ready to make long-term investment commitments, but still want to try to profit from the price volatility, you can do so through the contracts for difference, or CFDs.
So, what are your bets on the Barclays stock forecast? Will Barclays shares rise or fall?
Look into a crystal ball and make your own predictions based on the latest Barclays performance by checking out our comprehensive up-to-date chart.
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