Analyst Note
| Niklas Kammer, CFA |Over the first nine months of this year, no-moat Barclays recorded profit before tax of GBP 6.90 billion versus GBP 2.40 billion. These results are however heavily affected by credit impairment charges in the period last year (GBP 4.30 billion) and releases year to date (GBP 0.60 billion). Excluding this line item, performance was decent. Total income generation was flat at GBP 16.80 billion, although the depreciating U.S. dollar versus the British pound was partially to blame. Operating expenses came in 6% higher than a year ago, driven by structural costs to improve its efficiency in the longer term as well as higher performance fees, which was only partially offset by the before mentioned foreign-exchange movement. We plan to take a fresh look at our model and anticipate a modest increase to our fair value estimate as a result of improving interest-rate expectations and lower loan losses than we had feared. Our no moat rating is unchanged.