The UK bank has seen its issuance in the US market gradually recover following the over-issuance incident.

Barclays has reported a net profit of £3.6 billion (US$3.9 billion) for the first six months of the year, a 25% increase year-on-year (YoY).

Total income rose two percent to £13.5bn in H1 23 YoY while total operating expenses dropped 12% to £8.1 billion in the first six months.

The UK bank led by CEO C.S. Venkatakrishnan (pictured) also reported that income growth was primarily due to ‘the higher interest rate environment, including continued structural hedge income, and the benefit of higher balances in US cards, partially offset by the prior year benefit from hedging arrangements related to the over-issuance of securities and lower client activity in global markets and investment banking fees,’.

Excluding the impact of over-issuance of securities in the first half of 2022, total income was up nine percent and total operating expenses rose five percent in H1 23 YoY. 

At Barclays International’s corporate and investment bank (CIB), income decreased 10% to £7.1 billion in H1 23 YoY. Excluding the impact from prior-year hedging arrangements related to the over-issuance of securities , income was one percent lower YoY.

Within the global markets division income at £4.2 billion decreased by 25% in H1 23, or 13% excluding the impact from prior year hedging arrangements related to the over-issuance of securities.

Fixed income, commodity and credit (FICC) income was six percent lower to £3 billion in H1 23, ‘driven by macro reflecting lower market volatility and client activity, partially offset by a strong performance in credit’.

Equities income was down by 49% to £1.3 billion, or down 26% excluding the impact from the over-issuance of securities driven by a decline in derivatives income reflecting less volatile equity market conditions.

As of 30 June, Barclays Bank posted senior unsecured (privately placed) wholesale funding of £62.2 billion, accounted for 33.9% of the groupwide funding which included £50.5 billion worth of structured notes, of which £10.5bn will mature within one year, according to the bank.

Structured products

In the US market, Barclays Bank issued 1,256 retail structured notes with a total traded notional of US$4.4 billion in H1 23, accounting for 8.1% of the market. The UK was the only foreign bank in the top five issuer ranking after J.P. Morgan, Citi, Goldman Sachs and Morgan Stanley, SRP data shows.

The bank’s issuance represented a rebound from the prior-year period when the UK bank largely scaled down and halved its issuance - 555 products worth US$2.3 billion – as a result of the over-issuance incident. In the second half of 2022, the issuance was 717 worth US$2.6 billion, which enabled Barclays to take a market share of 4.6%.  

Outside the US, the bank issued 170 public offers worth an estimated US$500m across 10 different jurisdictions with Switzerland, the UK France and Japan leading issuance and sales.

At Barclays International, derivative financial instrument assets fell 22.9% to £264.9 billion as of 30 June YoY, which translated to 12.2% decline compared with six months ago. At the same time, derivative financial instrument liabilities were down by 20.8% to £254.5 billion YoY, or down by 11.9% from six months ago.

The declines reflected ‘lower market volatility and the strengthening of GBP against USD’ compared with six months ago. 

At a Group level, derivative assets/(liabilities) held for trading posted £64.2 trillion contract notional amount as of 30 June, was up by 21.8% compared to six months ago. Approximately 82.3% of the notional, or £53.5 trillion, came from interest rate derivatives, followed by foreign exchange (FX), equity and stock index and commodity and credit.

By fair value, assets stood at £264.6 billion while liabilities amounted to £254.4 billion over the first six months of 2023.

There were additional £285.8 billion contract notional amount for derivative assets/(liabilities) designated in hedge accounting relationship - the fair value of the assets and liabilities were £1.7 billion and £443m, respectively.

Click the links to view Barclays Plc’s H1 2022 earnings presentation and report.