Barclays share price: 5 things to watch in Q4 results

Barclays reports its fourth quarter (Q4) earnings this week and many investors await the bank’s 2018 revenue report. Here are five factors that could affect Barclays Q4 results.

Increase in expenses

Barclays earnings may be influenced by its rising legal expenses despite adopting cost-cutting measures. The bank’s misconduct settlement payment for £1.4 billion is sure to have an impact on Barclays Q4 results. The financial institution predicts 2018 expenses to be £13.9 billion.

Edward Bramson and Tiger Global

Both the activist investor and US hedge fund could shake up Barclays 2018 earnings. Tiger has sold its stake in the bank and activist investor, Edward Bramson, wants to exercise more control over the bank’s financial institution. Bramson’s insistence on withdrawing from investment banking could mean a drastic change in the financial institution’s banking strategy, according to, Michael Ingram, the chief market strategist at WH Ireland.

‘Tiger’s departure leaves Barclays even more exposed to Ed Bramson’s Sherborne Investment Management. This firm has built a 5.51% stake in Barclays and has been agitating for a withdrawal from investment banking and a return of risk capital to shareholders,’ said Ingram.

Tiger’s withdrawal right before Barclays earnings could mean trouble for the bank’s management, according to Michael Hewson, chief market analyst at CMC Markets UK.

‘The sale of this stake by Tiger Global is likely to increase the pressure on senior management from activist investor Edward Bramson who has been pressuring CEO, Jes Staley, to sell the underperforming investment banking division,’ said Michael Hewson, the chief market analyst at CMC Markets UK.

Results of other British banks

Barclays 2018 earnings could be impacted by the results of other British banks. HSBC Holdings earnings were disappointing and is dragging down the European markets. The international issues of the US-China war and a global economic slowdown are also influencing the revenue results of British financial institutions. Barclays results could also be negatively impacted by the same circumstances.

Brexit

Brexit is a factor for the earnings reports of many banks and Barclays 2018 results is no exception. Because of the volatility of the measure, the bank is reported to be shifting €190 billion of its €1.05 trillion (£1.2 trillion) worth of assets from the UK to Ireland. The uncertainty surrounding Brexit is already having an impact on the bank and could continue to have an influence on Barclays earnings.

Weak 2019 forecast

Barclays Q4 results could be affected by the financial institution’s own disappointing forecast. The bank’s managing director, Maneesh Deshpande, cut its 2019 earnings outlook in the wake of the current global economic concerns.

‘Our bottom-up EPS model forecast has declined substantially. Our base case remains that equities returns will be positive for 2019, although we now see a more limited upside. Retail sentiment has turned significantly bearish. Outlook for non-US economic growth is not as constructive,’ wrote Barclays' Maneesh Deshpande in a note to clients.

Barclays Q4 results could be impacted by a variety of circumstances. Investors will see if these five factors will weigh on Barclays earnings.