Barclays beats some expectations but uncertainty remains for investors
As Barclays reports half year results Graham Spooner, investment research analyst at The Share Centre, explains what they mean for investors.
"Barclays reported half year results this morning with net profit narrowing to £70m. Investors will be encouraged by a solid performance from the investment banking division which is key for Barclays. Some of the figures were ahead of expectations which could lead to analysts nudging up their forecasts.
"However, although the figures show signs of improvement, as with many of the other banks the concentration for investors is on the other issues the company faces.
"The Libor scandal is still overhanging and the bank has admitted it is "unpractical" to predict the financial impact. It has led to management resignations and a replacement CEO is yet to be hired creating further uncertainty.
"A further investigation has started by the FSA into four senior employees past and present regarding the disclosure of fees under certain commercial agreements. In addition, the bank has increased the amount of cash put aside for the mis-selling of PPI in Q1.
"Management issues and the company's business plan raise concerns for investors and are likely to act as a drag on any rally in the share price. Although our overall view on the sector is that investors should stay on the side lines, an appetite remains amongst investors and Barclays has remained our pick for a UK high street bank. However, in light of the further uncertainty we currently only recommend the stock for short term traders."