Barclays to Cut About 5,000 Jobs as AI Trims Costs; Quarterly Profit Rises to $3.1 Billion
Barclays said Thursday it is cutting about 5,000 jobs, or 5% of its workforce, this year as it uses artificial intelligence to lower costs, while reporting third-quarter pretax profit of $3.08 billion, Reuters reported.
Pretax profit of £2.3 billion rose 12% from a year earlier, but undershot analysts’ forecasts as the British bank’s fixed income trading business underperformed. Barclays also announced a new share buyback of £500 million, or about $670 million.
“I am disappointed, and you can be sure this will get my attention,” Chief Executive C.S. Venkatakrishnan said of fixed income trading, blaming a volatile quarter and weak trading in rates and credit products, according to Reuters.
Fixed income trading income slid 19% to £1 billion, below forecasts of £1.3 billion and worse than the 5% drop at its U.S. rivals. Equities revenue rose 47%, beating the 37% average gain across the top five U.S. players.
Total investment bank income was £3.1 billion, compared with forecasts of £3.3 billion, Reuters reported. Shore Capital said in a note that the results were weaker than expected because of the investment bank.
Barclays is the first major European lender to report third-quarter results. Its Wall Street rivals reported earlier this month that dealmaking slowed and fixed income desks underperformed, with equities trading the bright spot.
AI and Headcount
About 60% of the job cuts will hit support functions, including “fewer developers as AI makes our people more productive,” Chief Financial Officer Anna Cross said in prepared remarks for the results call.
Cross told reporters that 1,000 roles have already gone, with the rest to be cut by the end of the year, according to Reuters.
Cross said customer-facing technology has cut call center volumes by 10% over the past year, and changes to branch staffing have reduced employees per branch by about 10%.
Companies worldwide, including Microsoft and HSBC, have announced layoffs this year as automation spreads, Reuters noted.
The bank took £201 million in what it calls structural cost actions in the third quarter and plans about £300 million more in the fourth. It expects more than £1.1 billion in gross efficiency savings in 2027.
“The cuts illustrate just how significantly AI and automation could reshape the banking industry over the next few years,” said Will Howlett, financials analyst at Quilter Cheviot.
Overall, the bank reported an 11.7% return on tangible equity, earnings per share of 12.3 pence, up 18%, and a common equity tier 1 capital ratio of 14.2%. Income rose 3% to £7.4 billion.
“We have either achieved or are on track to achieve all of our 2026 Group targets,” Venkatakrishnan said in the results statement. Shareholder distributions announced so far this year total £2.8 billion, up 46%.
Barclays also has a sizable American footprint. Its U.S. Consumer Bank, built around partnership credit cards, has 23 million customers and $26.6 billion in digital deposits, Cross said.
Barclays shares slipped 0.1% on Thursday and are down 12% this year, Reuters reported.
British banks now face a budget from finance minister John Healey on Oct. 28. Healey has not ruled out higher taxes on bank profits.
Banks argue they are already heavily taxed compared with other countries and that any new levy would curb lending, Reuters reported.
Content created by Conservative Daily News and some content syndicated through CDN is available for re-publication without charge under the Creative Commons license. Visit our syndication page for details and requirements.
