Barclay's unvearning a share buyback plan worth more than nine hundred and sixty million US dollars This coming is the British lender reported better than expected second quarter investment banking revenue and boosted its guidance for the full year. Joining us now is the Barclay CEO CS ven Karatea Krishna ven Katta.
It's great to catch up with you, sir.
Once again, I will go through the numbers so you could be modest and you don't have to Equity underwriting booming.
Equity's trading up nicely.
The stock is up by something like fifty percent year today, Venkat. There was some weakness in thick trading that I want to get to in just a moment. But let's start with the position of strength you're in Equity's trading. Where did that strength come from, Venkat? And do you expect it to continue through the year.
Well, thank you for asking me to join the program.
I'm very grateful to be here. And as you say, we are in the process of delivering on the investor plan that we laid out in February of this year, which was to have a simpler, bitter, more balanced bank a bank that returns twelve percent hour to e and above by twenty twenty six, returning about ten billion pounds to shareholders by twenty twenty six and more, and then rebalancing the bank so that the investment bank goes from around sixty percent of the bank to around fifty percent
of the bank. One part of the investment bank is our market's business and the equity business, which you highlight.
We've always had a.
Great strength and equity and I think as equity markets themselves have gone through the changes that you've seen in this since the start of this year, our traders have been able to capitalize on client demand, on increasing volatility and providing the kind of innovative derivative solutions they seek clients seek from Barclays and I do expect as market volatility keeps the pace for our performance in equities to continue.
While we're seeing that same strength in sick trading VENCAT, I wonder what you can do to turn things around in that particular part of the business.
So within FEC, we are a very very strong credit house and typically in the top three. One of the reasons in fig that in the market and for us, it affects US. Maybe a little more is that credit spreads have been muted and credit volatility has been muted, quite the opposite case from equities. In European rates, which is an area of growth for US, we've improved from the first quarter to the second quarter, and securitized products, which is an important part of fixed income, is growing
from strength to strength. So our fit performance is improved from the first quarter to the second and I could expect to continue to see more of that improvement as the year goes on.
Venkatte, We've been having a debate for several months now. Are rate cuts good or bad for banks? Or rate hikes good or bad for banks? Are rate cuts broadly good or bad for your profitability at a time when a lot of people are expecting them globally?
Thank you and Mark.
So what I would say is very special about this rate cycle is that the what we're expecting is not a spate of cuts, but fine tuning adjustments. So the answer to your question is, I don't think they'll make that much of a difference to.
A bank like ours or to the large banks.
You know.
My colleague A. J.
Raja at Thyaksha, who runs in macro research for US often says a rate cycle is when you go up in an escalator meaning slow cuts, and come down in an elevator slow rises and then fast cuts coming down in an elevator. What we've seen this time is we went up in an elevator, meaning very fast rate hikes, and we may be coming down by the stairs. So you saw a fine tuning adjustment by the Bank of England this morning. You saw the FED pause, but they're
indicating they may go later this year. All of these things are just trying to adjust interest rates by a small amount because real rates have crept up at a constant inflation which is two percent, which is low. But it's just trying to overcome the slight impediment of rising real rates. So I don't expect this to have much of an effect on the banking sector, if any, and certainly we are not changing the way we view the world world because of this modest rate cut.
In the meantime, you say that you are on track to achieve one billion pounds in cost cuts. There is sort of some swirling questions around where those cost cuts are coming from. Is it simply just being more efficient in certain sectors, is it ongoing job cuts.
What are you executing?
So we did a billion pounds worth of structural cost actions last year. We're seeing a the benefits of some of that. B We're seeing the benefits of a greater focus on productivity and efficiency in the way in which we run the bank. And what we are also seeing is the results of investments which we have made, particularly
in markets, particularly in trading technology. I'm talking to you from our equity trading flow in London and the way we have increased our market share and electronic trading here in Europe and in the US is all a result of past investment. You have to continue to do it, but it's probably at a slower pace than we did in the last couple of years. Its efficiency and better investment.
Can I ask you about the advisory business with that in mind, how is that going? How's the turnaround going in that unit?
So, investment banking we've done, as you've seen the results in the banking side quite strongly. Equity capital markets did very well, advisories improving. We still have a little way to go. We are seeing deal volume pickup, we're seeing our backlog increasing and I think over time, as some of these ideas fructify, you will see an improvement in the advisory numbers.
I'd love your view, Ven Kaunt on how business is going more generally as you look across Corporate America and corporations across Europe. I can share with you some of the comments we've heard from Corporate America over the last couple of weeks from P ANDNG. They're seeing slower price increases. Kimberly Clark also saying the same thing. McDonald's are talking about the first sales slide since twenty twenty. Pepsi saying the consumer is becoming more challenged. You've got a massive
consumer business as well with the barcleaycart business. When you look at corporations and the consumer, are you seeing the same kind of slow down? VENCA from your vantage point.
So, what we are seeing and which is good for the credit performance of banks, is we are seeing both consumers and corporates focusing on efficiency and managing their budgets more carefully. So if you are in the consumer business, and if you're a consumer oriented company, what you will see is therefore a lack of pricing power and then
people economizing. We see that in our own customers. What that means though, is that even though employment is still very strong both in the UK and the US, people are managing their budgets more carefully, which is one of the reasons why buy and large credit impairment costs for banks have been relatively well controlled. So it's good for the consumer to do this and manage their budgets.
It's good for their lenders.
Because they're seeing less signs of consumer distress. It's good however, it's for their economy. However, their are winners and losers, and that's what you're seeing from some of the people you're quoting.
Are you seeing a big difference in terms of consumer strength globally depending on the region. We've been talking a lot about how the consumer shows a lot of I guess restraint when it comes to spending, but more so in some of the sector is more leverage to Chinese consumers. How much you see in Europe in a weaker spot than say the US.
Well, I think I think the slowdown which we've seen in China is palpable, and what Chinese demand has done is affected sectors which were particularly exposed to them. You saw some of it in the fashion goods industry and tech of course, is a different situation because you know the trade with China is being limited in tech for other reasons. But I do think that what you will see as people with that exposure to China being more affected.
You've already seen it in the numbers and that I expect that you'll see that for some time to come.
How much does it affect where you're expanding or where you're not expanding.
Well, Barclay's is a first and foremost a consumer bank in the UK, a global investment bank, and so got a very strong corporate presence and a wealth presence. But all of that is very highly connected to London, from Europe, from the United States, and then from India, Singapore, Hong Kong. We are not a major presence in mainland China, and so what we think is that the impact of what's happening in China is relatively more muted for US compared to other banks with larger exposures.
It has raise a question though about some of the tensions that have been coming to the fore politically internationally, in terms of potential tariffs, potential restrictions, changing policies, the elections. How are you trying to get ahead of that at a time where there's a lot of policy uncertainty, and arguably that's one reason why advisory and mergers and acquisitions have been as robust as some people had expected it to be.
It's a very very good point, and I think the big area where all that comes into play is cross border m and A and cross border transactions. You've even seen a slowdown of that within Europe itself, you know. For us, it highlights one of the things which we've done, which is we decided very early this year when we did our investorday and made the decision towards the end of last year to invest thirty billion pounds of risk created assets in the UK. The UK has had its election,
We've elected a business friendly government. The transition has been smooth and it points to the importance for banks like us to be in places with very clear economic policy, the good rule of law, growth and stable governments and stable economic policies.
Venkat the year is going well. Hopefully next time you're in New York we can catch up again here in the studio. I appreciate your time this morning, sir. Thank you. The Barclay CEO CS ven Kara Krishna, the Barclay stock is up more fifty percent.
It's quite a year so far for Barclays.
They've also pledged seven hundred and fifty million pounds being returned to shareholders, so quite big in terms of dividend payments.