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Barclays due diligence report.

Hatchworks has conducted due diligence on Barclays, a major British bank providing a variety of financial products and services throughout the world. Barclays is organized into four core businesses: personal banking, corporate banking, wealth management, and investment management. Barclays is headquartered in London and listed on the London Stock Exchange, under symbol ‘’BARC’’.

Financials — Barclays
(source: Marketscreener.com)

Barclays current market cap is £15B.

With a predicted net-income growth of 9.8% for 2020E and 2021E, and a net income estimate for 2021E in excess of £3.9B, this points to a P/E ratio of 3.54x.

The revenue/sales forecast is £21.3B for 2020E, indicating a P/S ratio of 0.68x.

In terms of profitability, an operating margin of 37.2% is predicted for 2020E. This compares to a 48% operating margin for competitor LLoyds (LLOY).

Barclays has a relatively high expected yield of 11.4% for 2020E. Some competitors, have a higher expected yield; for example, Royal Bank of Scotland (RBS) at 11.4%.

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Looking at Barclays annual 2019 results we can see that:

  • Net profits were up 39.4% compared with 2018.

To date, bank interest-margins are coming under pressure owing to an ongoing interest rate downward spiral. Also, big banks have given loans to certain oil and gas companies. Due to the oil price war between Saudi Arabia and Russia, oil prices plunged significantly and, as a result, certain oil and gas companies could potentially experience problems repaying their debts on time. Another major concern is the Covid-19 (a.k.a. Coronavirus) pandemic; it is still very uncertain how this will play out, not least because it’s a global problem but because it hurts the ability of borrowers (either people or companies) to repay debt.

As a result of all this, Hatchworks will maintain its position in Barclays with a long term view but not allocate further until systemic risks have subsided.

The Hatchscore is 6.9 out of 10. Full details can be found on Hatchnet: www.hatch-net.com/companies

What is Barclays?

A British multinational investment bank and financial services company, headquartered in London, organized into four core businesses: personal banking, corporate banking, wealth management, and investment management.

Big Investors:

  • Qatar Holding LLC.
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What are the risks?

  • If banks pass on negative interest rates to their regular retail clients, they could see significant withdrawals. As a result, market share could drop rapidly.

Top competitors:

  • Lloyds. (LLOY)

Management team:

  • Sir Ian Cheshire: Chairman.

The Hatchworks Team

The forecast figures are based on the data of MarketScreener and not from Hatchworks: https://www.marketscreener.com/BARCLAYS-PLC-9583556/financials/

Legal Disclaimer — This report summary has been generated as a result of Hatchworks’ proprietary company vetting and filtering system. The level of due diligence conducted on investible assets conducted ranges from mediocre to significant, the latter being the case where Hatchworks has explicitly taken strategic positions in. By no means is the information in this file to be relied on as investment advice; this includes Hatchworks’ algorithmic composite score known as ‘Hatchscore’. Hatchworks has not received any compensation for this research. For more information you can reach us at info@hatchworksvc.com. This report is not for distribution in the United States of America. It is closed to U.S citizens. If you are a U.S. citizen, you should delete this report or return to sender.

Written by

Heading up the group’s R&D activities for Hatchworks.

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