Barclays shares were flat after third-quarter results that beat on profit before tax but missed on income, with weakness in the investment bank's fixed income, currencies and commodities (FICC) trading desk accounting for the bulk of the shortfall.
UBS, which has a buy rating and a 590p target price on the stock, said group profit before tax came in 4% below company consensus, driven by a 3% miss on total income.
The investment bank was the main culprit, with income 6% below consensus, more than three-quarters of which was attributable to FICC, which came in 21% below forecasts.
Equities partially offset the miss, beating expectations by 18%, while banking fees came in 4% below consensus and corporate lending was negative due to around £39 million of leveraged finance marks.
Costs were in line with consensus, and credit impairment charges at 43 basis points of loans came in 14% lower than expected, providing some relief at the profit line.
The common equity tier 1 (CET1) ratio of 14.2% was 10 basis points below consensus, falling to 14.0% on a pro forma basis after the £500 million buyback announced with the results.
UBS said Barclays would likely need to update its capital guidance at full-year results, given it is running at the top of its 13-14% CET1 target range ahead of the Basel 3.1 implementation in January 2027.
On the positive side, Basel 3.1 is expected to increase risk-weighted assets by £8-15 billion but will be partly offset by a 59 basis point reduction in the Pillar 2A capital requirement, which UBS described as a small net positive for growth and distributions.
Full-year guidance and 2028 targets were left unchanged, with a return on tangible equity of more than 12% targeted for 2026 and more than 14% by 2028.
