Speaker 1: Barclay's unvearning a share buyback plan worth more than nine
Speaker 1: hundred and sixty million US dollars This coming is the
Speaker 1: British lender reported better than expected second quarter investment banking
Speaker 1: revenue and boosted its guidance for the full year. Joining
Speaker 1: us now is the Barclay CEO CS ven Karatea Krishna
Speaker 1: ven Katta.
Speaker 2: It's great to catch up with you, sir.
Speaker 1: Once again, I will go through the numbers so you
Speaker 1: could be modest and you don't have to Equity underwriting booming.
Speaker 2: Equity's trading up nicely.
Speaker 1: The stock is up by something like fifty percent year today, Venkat.
Speaker 1: There was some weakness in thick trading that I want
Speaker 1: to get to in just a moment. But let's start
Speaker 1: with the position of strength you're in Equity's trading. Where
Speaker 1: did that strength come from, Venkat? And do you expect
Speaker 1: it to continue through the year.
Speaker 3: Well, thank you for asking me to join the program.
Speaker 3: I'm very grateful to be here. And as you say,
Speaker 3: we are in the process of delivering on the investor
Speaker 3: plan that we laid out in February of this year,
Speaker 3: which was to have a simpler, bitter, more balanced bank
Speaker 3: a bank that returns twelve percent hour to e and
Speaker 3: above by twenty twenty six, returning about ten billion pounds
Speaker 3: to shareholders by twenty twenty six and more, and then
Speaker 3: rebalancing the bank so that the investment bank goes from
Speaker 3: around sixty percent of the bank to around fifty percent
Speaker 3: of the bank. One part of the investment bank is
Speaker 3: our market's business and the equity business, which you highlight.
Speaker 2: We've always had a.
Speaker 3: Great strength and equity and I think as equity markets
Speaker 3: themselves have gone through the changes that you've seen in
Speaker 3: this since the start of this year, our traders have
Speaker 3: been able to capitalize on client demand, on increasing volatility
Speaker 3: and providing the kind of innovative derivative solutions they seek
Speaker 3: clients seek from Barclays and I do expect as market
Speaker 3: volatility keeps the pace for our performance in equities to continue.
Speaker 1: While we're seeing that same strength in sick trading VENCAT,
Speaker 1: I wonder what you can do to turn things around
Speaker 1: in that particular part of the business.
Speaker 3: So within FEC, we are a very very strong credit
Speaker 3: house and typically in the top three. One of the
Speaker 3: reasons in fig that in the market and for us,
Speaker 3: it affects US. Maybe a little more is that credit
Speaker 3: spreads have been muted and credit volatility has been muted,
Speaker 3: quite the opposite case from equities. In European rates, which
Speaker 3: is an area of growth for US, we've improved from
Speaker 3: the first quarter to the second quarter, and securitized products,
Speaker 3: which is an important part of fixed income, is growing
Speaker 3: from strength to strength. So our fit performance is improved
Speaker 3: from the first quarter to the second and I could
Speaker 3: expect to continue to see more of that improvement as
Speaker 3: the year goes on.
Speaker 4: Venkatte, We've been having a debate for several months now.
Speaker 4: Are rate cuts good or bad for banks? Or rate
Speaker 4: hikes good or bad for banks? Are rate cuts broadly
Speaker 4: good or bad for your profitability at a time when
Speaker 4: a lot of people are expecting them globally?
Speaker 2: Thank you and Mark.
Speaker 3: So what I would say is very special about this
Speaker 3: rate cycle is that the what we're expecting is not
Speaker 3: a spate of cuts, but fine tuning adjustments. So the
Speaker 3: answer to your question is, I don't think they'll make
Speaker 3: that much of a difference to.
Speaker 2: A bank like ours or to the large banks.
Speaker 3: You know.
Speaker 2: My colleague A. J.
Speaker 3: Raja at Thyaksha, who runs in macro research for US
Speaker 3: often says a rate cycle is when you go up
Speaker 3: in an escalator meaning slow cuts, and come down in
Speaker 3: an elevator slow rises and then fast cuts coming down
Speaker 3: in an elevator. What we've seen this time is we
Speaker 3: went up in an elevator, meaning very fast rate hikes,
Speaker 3: and we may be coming down by the stairs. So
Speaker 3: you saw a fine tuning adjustment by the Bank of
Speaker 3: England this morning. You saw the FED pause, but they're
Speaker 3: indicating they may go later this year. All of these
Speaker 3: things are just trying to adjust interest rates by a
Speaker 3: small amount because real rates have crept up at a
Speaker 3: constant inflation which is two percent, which is low. But
Speaker 3: it's just trying to overcome the slight impediment of rising
Speaker 3: real rates. So I don't expect this to have much
Speaker 3: of an effect on the banking sector, if any, and
Speaker 3: certainly we are not changing the way we view the
Speaker 3: world world because of this modest rate cut.
Speaker 4: In the meantime, you say that you are on track
Speaker 4: to achieve one billion pounds in cost cuts. There is
Speaker 4: sort of some swirling questions around where those cost cuts
Speaker 4: are coming from. Is it simply just being more efficient
Speaker 4: in certain sectors, is it ongoing job cuts.
Speaker 2: What are you executing?
Speaker 3: So we did a billion pounds worth of structural cost
Speaker 3: actions last year. We're seeing a the benefits of some
Speaker 3: of that. B We're seeing the benefits of a greater
Speaker 3: focus on productivity and efficiency in the way in which
Speaker 3: we run the bank. And what we are also seeing
Speaker 3: is the results of investments which we have made, particularly
Speaker 3: in markets, particularly in trading technology. I'm talking to you
Speaker 3: from our equity trading flow in London and the way
Speaker 3: we have increased our market share and electronic trading here
Speaker 3: in Europe and in the US is all a result
Speaker 3: of past investment. You have to continue to do it,
Speaker 3: but it's probably at a slower pace than we did
Speaker 3: in the last couple of years. Its efficiency and better investment.
Speaker 1: Can I ask you about the advisory business with that
Speaker 1: in mind, how is that going? How's the turnaround going
Speaker 1: in that unit?
Speaker 3: So, investment banking we've done, as you've seen the results
Speaker 3: in the banking side quite strongly. Equity capital markets did
Speaker 3: very well, advisories improving. We still have a little way
Speaker 3: to go. We are seeing deal volume pickup, we're seeing
Speaker 3: our backlog increasing and I think over time, as some
Speaker 3: of these ideas fructify, you will see an improvement in
Speaker 3: the advisory numbers.
Speaker 1: I'd love your view, Ven Kaunt on how business is
Speaker 1: going more generally as you look across Corporate America and
Speaker 1: corporations across Europe. I can share with you some of
Speaker 1: the comments we've heard from Corporate America over the last
Speaker 1: couple of weeks from P ANDNG. They're seeing slower price increases.
Speaker 1: Kimberly Clark also saying the same thing. McDonald's are talking
Speaker 1: about the first sales slide since twenty twenty. Pepsi saying
Speaker 1: the consumer is becoming more challenged. You've got a massive
Speaker 1: consumer business as well with the barcleaycart business. When you
Speaker 1: look at corporations and the consumer, are you seeing the
Speaker 1: same kind of slow down? VENCA from your vantage point.
Speaker 3: So, what we are seeing and which is good for
Speaker 3: the credit performance of banks, is we are seeing both
Speaker 3: consumers and corporates focusing on efficiency and managing their budgets
Speaker 3: more carefully. So if you are in the consumer business,
Speaker 3: and if you're a consumer oriented company, what you will
Speaker 3: see is therefore a lack of pricing power and then
Speaker 3: people economizing. We see that in our own customers. What
Speaker 3: that means though, is that even though employment is still
Speaker 3: very strong both in the UK and the US, people
Speaker 3: are managing their budgets more carefully, which is one of
Speaker 3: the reasons why buy and large credit impairment costs for
Speaker 3: banks have been relatively well controlled. So it's good for
Speaker 3: the consumer to do this and manage their budgets.
Speaker 2: It's good for their lenders.
Speaker 3: Because they're seeing less signs of consumer distress. It's good however,
Speaker 3: it's for their economy. However, their are winners and losers,
Speaker 3: and that's what you're seeing from some of the people
Speaker 3: you're quoting.
Speaker 4: Are you seeing a big difference in terms of consumer
Speaker 4: strength globally depending on the region. We've been talking a
Speaker 4: lot about how the consumer shows a lot of I
Speaker 4: guess restraint when it comes to spending, but more so
Speaker 4: in some of the sector is more leverage to Chinese consumers.
Speaker 4: How much you see in Europe in a weaker spot
Speaker 4: than say the US.
Speaker 3: Well, I think I think the slowdown which we've seen
Speaker 3: in China is palpable, and what Chinese demand has done
Speaker 3: is affected sectors which were particularly exposed to them. You
Speaker 3: saw some of it in the fashion goods industry and
Speaker 3: tech of course, is a different situation because you know
Speaker 3: the trade with China is being limited in tech for
Speaker 3: other reasons. But I do think that what you will
Speaker 3: see as people with that exposure to China being more affected.
Speaker 3: You've already seen it in the numbers and that I
Speaker 3: expect that you'll see that for some time to come.
Speaker 4: How much does it affect where you're expanding or where
Speaker 4: you're not expanding.
Speaker 3: Well, Barclay's is a first and foremost a consumer bank
Speaker 3: in the UK, a global investment bank, and so got
Speaker 3: a very strong corporate presence and a wealth presence. But
Speaker 3: all of that is very highly connected to London, from Europe,
Speaker 3: from the United States, and then from India, Singapore, Hong Kong.
Speaker 3: We are not a major presence in mainland China, and
Speaker 3: so what we think is that the impact of what's
Speaker 3: happening in China is relatively more muted for US compared
Speaker 3: to other banks with larger exposures.
Speaker 4: It has raise a question though about some of the
Speaker 4: tensions that have been coming to the fore politically internationally,
Speaker 4: in terms of potential tariffs, potential restrictions, changing policies, the elections.
Speaker 4: How are you trying to get ahead of that at
Speaker 4: a time where there's a lot of policy uncertainty, and
Speaker 4: arguably that's one reason why advisory and mergers and acquisitions
Speaker 4: have been as robust as some people had expected it
Speaker 4: to be.
Speaker 3: It's a very very good point, and I think the
Speaker 3: big area where all that comes into play is cross
Speaker 3: border m and A and cross border transactions. You've even
Speaker 3: seen a slowdown of that within Europe itself, you know.
Speaker 3: For us, it highlights one of the things which we've done,
Speaker 3: which is we decided very early this year when we
Speaker 3: did our investorday and made the decision towards the end
Speaker 3: of last year to invest thirty billion pounds of risk
Speaker 3: created assets in the UK. The UK has had its election,
Speaker 3: We've elected a business friendly government. The transition has been
Speaker 3: smooth and it points to the importance for banks like
Speaker 3: us to be in places with very clear economic policy,
Speaker 3: the good rule of law, growth and stable governments and
Speaker 3: stable economic policies.
Speaker 1: Venkat the year is going well. Hopefully next time you're
Speaker 1: in New York we can catch up again here in
Speaker 1: the studio. I appreciate your time this morning, sir. Thank you.
Speaker 1: The Barclay CEO CS ven Kara Krishna, the Barclay stock
Speaker 1: is up more fifty percent.
Speaker 2: It's quite a year so far for Barclays.
Speaker 4: They've also pledged seven hundred and fifty million pounds being
Speaker 4: returned to shareholders, so quite big in terms of dividend payments.