Wednesday, 29 July 2015

Barclays: the grind to 300p+

After the excitable management change at Barclays of a few weeks ago (link here) now some numbers to play with...and comments too.  Listening to the conference call I like the ongoing noises around simplification, a stronger balance sheet (organically) and establishing a 'credible agenda' for all interest groups which they can execute on.

I talked at the link above about a fundamental value for Barclays shares of closer to 300p and I stick with this given the core bank return on tangible equity in excess of 13%...

...and a tangible NAV of just under 280p even applying a discount for the continued wind-down of the non-core bank.  
Ok the interim dividend was not raised but the push back on some earlier in the week comments in the press about the potential need for a money raising were pushed back and I note sensible progress on costs ('positive jaws') and 2016 costs/capital targets remain in place.  There was some chat, however, of higher provisioning costs in H2 versus H1.  No disaster overall.

So I remain a holder in hope of 300p+ a share - certainly my instinct is not to even considering to sell any shares until at least there is a '3' in front of it.

Barclays is not out of the woods at all but with a combination of growth scope at Barclaycard and its African operations, simplification assisting the utility-like retail banking division and focus assisting the investment bank there are angles still for shareholders.  Barclays shares may have generally been grinding up this year but to remain hopeful of a grind past 300p remains a reasonable view.  

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