Barclays increases US sales as EQD drives Q2 revenues

Barclays Bank, the issuance entity of Barclays Plc in the US, traded US$3.55 billion notional across 861 structured notes registered with the US Securities and Exchange Commission (SEC) in the second quarter of 2024, according to SRP data.

The sales volume translated to a 7.2% increase despite a 10.5% decrease in issuance quarter-on-quarter (QoQ). The UK bank stood out along with Morgan Stanley with a quarterly growth when their peer issuers slowed down, including J.P. Morgan, Goldman Sachs and Citigroup, which posted a respective decline of 11.6%, 4.8% and 4.0%.

The bank's activities have rebounded from the prior-year period when structured product trading was still marred by the bank’s over-issuance incident in the US. In Q2 24, its structured products sales were almost doubled while issuance was up 50.8% year-on-year (YoY).

Barclays: issuances and sales of SEC-registered structured notes

_{Source: SRP}

The registered structured note market amassed a total of US$33 billion principal for the period from April to June, which is at a stable level QoQ, but up 33% year-on-year (YoY).

Accordingly, Barclays’ market share climbed to 10.9% from 9.6% in the third place after J.P. Morgan (US$4.6 billion,13.9%) and Goldman Sachs (US$4.0 billion,12.1%).

By sales volume, the top two products issued on the paper of Barclays Bank were distributed by Morgan Stanley Wealth Management with US$80.6m and US$75.3m notional, respectively. They both are contingent income callable non-principal-protected notes with a worst-of option on the S&P 500, Nikkei 225 and Russell 2000.

With a three-year tenor, the best-seller was priced on 12 April. Barclays Capital, the agent, paid a 1.5% sales commission to the distributor and its financial advisors on top of a 0.43% structuring fee to the distributor.

Barclays: top 5 best-sellers of SEC-registered structured notes in Q2 2024

Product name	Distributor	Initial valuation date	Sales volume (US$m)
Contingent Income Callable Securities - Worst of Option (06745QLP2)	Morgan Stanley Wealth Management	12-Apr	80.6
Contingent Income Callable Securities - Worst of Option (06745UC24)	Morgan Stanley Wealth Management	26-Jun	75.3
Trigger Callable Contingent Yield Notes (daily coupon observation) - Worst of Option (06748L222)	UBS Financial Services	03-Apr	53.5
Cash-Settled Equity-Linked Notes - Zoetis (06745QRH4)	Barclays Capital	01-May	51.0
Trigger Callable Contingent Yield Notes (daily coupon observation) - Worst of Option (06748M774)	UBS Financial Services	14-May	44.6

  _{Source: SRP}

UBS Financial Services was also the distributor behind the third and the fifth best-selling notes for Barclays, which collected US$53.5m and US$44.6m principal amount, respectively.

With a tenor of 3.5 years, both notes are trigger callable contingent yield notes linked to the S&P 500, Russell 2000 and Nasdaq 100, featuring a daily coupon observation.

Index baskets have been the dominant underlying for Barclays’ issuance, which made up 46.2% of the total sales in Q2 2024 - a stable level QoQ.

Barclays: SEC-registered structured note sales by underlying type

_{Source: SRP}

Despite the quarterly sales increase, single index and single stock structures lost traction accounting for 20.5% and 14.8% of the sales, compared to 23.9% and 18.1%, respectively.

Across the globe, Barclays’ issuance in the second quarter of 2024 also included 19 SEC-registered callable fixed rate notes with combined notional of US$87.1m in the US; 4,425 structured notes in Switzerland, 54 in Italy, 42 in the UK, 27 in France, 20 in Japan, 11 in Sweden, seven in Finland, four in South Africa, and three each in Ireland and Portugal.

Earnings

Barclays reported attributable profit of £1.2 billion (US$1.5 billion) for the second quarter of 2024, down seven percent YoY, while total income increased one percent to £6.3 billion.

Meanwhile, total operating expenses dropped one percent to £4 billion, according to the latest earnings report by CEO C. S. Venkatakrishnan (pictured). 

By segment, investment bank delivered the greatest growth with £3 billion in income, up 10% YoY, accounting for nearly half of the total income. Next in line is Barclays UK, which generated £1.9 billion income despite a four percent decline YoY.

Within the investment bank division, investment banking income rose seven percent to £2.2 billion. Meanwhile, global markets income fell three percent to £4.1 billion as increased income in equities was more than offset by lower income in fixed income currency and commodity (FICC).

Equities income went up 25% to £1.6 billion, ‘driven by growth across products reflecting increased client activity in derivatives and growth in financing balances’, additionally supported by a £125m fair value gain on Visa B shares in Q1 24.

FICC income decreased 14% to £2.6 billion, reflecting lower client activity in macro and the nonrepeat of the inflation benefit from prior year, partially offset by strong performance in securitised products

As of 30 June, the UK banking group had £251.4 billion derivative assets and £241.8 billion derivative liabilities, which were largely unchanged from six months ago. 

Click the links to read Barclays Plc’s H1 2024 results announcement and Q2 2024 results presentation.

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