Barclays - Bank Holding Company Case Anaylsys, 4-5 pages single spaced

Barclays Bank Performance Analysis

Introduction

Barclays Bank’s origin can be traced back to 1690 to a goldsmith banking system in the City of London. Barclays provides personal loans, credit cards, personal banking facilities and business loans. The purpose of this report is to analyze the performance of Barclays Bank in by particularly using CAMELS components with a view point of the regulators. The purpose of this analysis is to identify any problems or red flags in the bank and suggest some recommendations to remove these problems and the red flags.

A. Liquidity

The liquidity position of a bank tells that how much funds the bank has to meet the requirements of the business’ daily financial needs or routine expenses.

In the above tables and graph we can see that the liquidity position of the bank is better than the peer’s average and the median and also that the bank has lower risks position than its peers. Although the bank’s liquidity position has got lower from what it was in the previous years.

In the above tables and graph we can see that the net loans and leases to totals assets of the bank have increased from the previous year but it s still very low from peer average and also is at the median.

B. Sensitivity to Market Risk

The sensitivity of the Barclays bank is better than the previous year’s which means the bank has responded better to the emerging issues and needs this year than the previous year which gives us indication of improvement in the sensitivity of the bank. However the NIM of the Barclay is lower than the peer’s average which does tell a good point for the business management and abilities.

C. Earnings

The earnings of the business can be analyzed through the following ratios and figures:

Net income.
Year 2016	Year 2017	Year 2018
0.14	0.56	-0.48

The above table and graph shows that the net income of the business has increased in year 2017 from what it was in 2016 but it has decreased in the year 2018 which is in fact a loss.

The return on equity of the bank has decrease to great extent and it has become negative because of losses in the current year. This is very low from the previous year and the peer average.

The free income ratio of the bank is greater than the peers average and also that it has increased from the previous year’s free income ratio of the bank which is one plus point for the management and bank.

D. Asset Quality

Again the return on assets of the bank is also negative because of losses in the current year which is much lower than the previous year’s ROA and also the ROA of the peers. This is red flag for the bank.

The asset quality or loan quality of the bank is better than the peers average but it is and also better than the previous years’ quality of assets of the bank.

E. Capital

The capitalization of ratio of the bank is lower than the peers but it is higher than the previous year’s capitalization of the bank. This means that the bank has some planning to improve the capitalization of it but still it is behind the peers because of some factors like poor profitability and asset management.

F. Management

The efficiency ratio above tells us high the bank’s overhead expenses have increased in respect to the adjusted operating income. This efficiency ratio of the bank has got weaker from the previous years’ efficiency ratio and also this efficiency ratio is weaker than the peer average. This becomes a red flag for the bank which needs to be looked after by the management.

Again this efficiency ratio tells us high the bank’s overhead expenses have increased in respect to the average total assets. This efficiency ratio of the bank has also got weaker from the previous years’ efficiency ratio and also this efficiency ratio is weaker than the peer average. This is majorly because of the losses this year that the bank has to suffer.

G. CRA Ratings

The CRA rating of Barclays has been satisfactory for most of the period in last two decades. In 2016, the CRA rating of the bank increased to outstanding category. The current CRA rating of the bank is satisfactory which is because the bank is responsive to its credit needs and the community development needs by good practices and providing qualified services and investment. The lending of the bank is excellent.

Conclusion and Recommendations

From the analysis of the Barclays different ratios, it can be concluded that the bank has some strengths and weakness. These strengths and weaknesses are as follows:

· The Asset quality of the bank is its strength because it is better than the peer average and also it got better from the previous year so it becomes strength of the bank.

· The risk factor at the bank is lower as compare to the peers which is one of the strength of the bank.

· The bank has suffered losses which make the profitability of the bank look so poor. This makes a weakness of the bank.

· The efficiency of the management is poor because the overhead expense is much higher with respect to both the income the total asset.

It is recommended that the bank should revise its policies to improve efficiency which will reduce the expenses which are causing the bank losses. The overhead expenses should be should be controlled because the overhead expenses are very high which are one of the main cause of reduced profitability. The bank should also focus on increasing the lending options which will increases the interest income of the bank.

References

Barclays Bank (1951). The Eagle Looks Back. a Silver Jubilee Anthology of Twenty-Five Years' Contributions to "The Spread Eagle", the Staff Magazine of Barclays Bank Limited. London: Spread Eagle.

Tuke, A. W.; Gillman, R. J. H. (1972). Barclays Bank Limited, 1926–1969: Some Recollections. London: Barclays Bank Ltd.

Carrington, Mark; Langguth, Philip; Steiner, Thomas (1997).  The banking revolution: salvation or slaughter? : how technology is creating winners and losers . Financial Times Pitman. p. 119.

Net income. Year 2016 Year 2017 Year 2018 0.14000000000000001 0.56000000000000005 -0.48000000000000004

ROE (NetInc/Avg Equ)

ROE (NetInc/Avg Egu) BHC Peer Average Percentile Previous Period -6.58 7.23 1 8.120000000000001 Fee income Ratio (total nonint inc/adjusted oper inc) BHC Peer Average Percentile Previous Period 64.849999999999994 28.69 90 65.89 ROA (NetInc/Avg TA) BHC Peer Average Percentile Previous Period -0.48000000000000004 1.2 0 0.56000000000000005 ASSET QUALITY (Net Losses/Avg Loans & Leases) BHC Peer Average Percentile Previous Period 2.92 0.19 97 2.3199999999999994 CAPITALIZATION (Tier 1 Common Equity Capital /T R WA) BHC Peer Average Percentile Previous Period 13.51 12.129999999999999 77 12.2 Eficiency Ratio (total overhead exp/adiusted oper inc) BHC Peer Average Percentile Previous Period 95.910000000000011 60.86 97 66.989999999999995 (Nonint Exp or Overhead)/Avg TA BHC Peer Average Percentile Previous Period 4.83 2.71 97 2.56 Nonint Inc/Avg TA BHC Peer Average Percentile Previous Period 3.2600000000000002 1.31 90 2.52 Lquidity (Shortlerm Inv/ST noncore Funding) BHC Peer Average Percentile Previous Period 108.23 68.849999999999994 78 114.06 Lquidity (Net loans and leases / Total assets) BHC Peer Average Percentile Previous Period 22.12 63.730000000000004 6 19.059999999999999 NIM (Net Int Inc/Avg TA) BHC Peer Average Percentile Previous Period 1.77 3.02 8 1.3