By Elena Vardon

Barclays nudged up its earnings guidance for the year and set out a surprise buyback program even as provisions linked to its investment bank's credit exposure and a U.K. car-loan probe weighed on third-quarter profit.

The British bank on Wednesday said it booked a 110 million pound charge for its exposure to a single client, U.S. firm Tricolor. The subprime auto lender filed for bankruptcy last month amid allegations of fraud and accounting impropriety and has raised concerns about the risks that private credit markets pose to the banking system.

Peer JPMorgan Chase last week wrote down $170 million in its third-quarter accounts for Tricolor's collapse, with Chief Executive Jamie Dimon warning about the credit risks--"cockroaches"--lurking in the U.S. economy.

Jitters have mounted in recent weeks after the sudden collapse of auto-parts giant First Brands, which led to banks such as UBS and Jefferies to rush to tally their exposure to the company, its customers and suppliers.

"When you lend money you've got to be prepared for all outcomes including fraud," Barclays Chief Executive C. S. Venkatakrishnan told reporters.

Venkatakrishnan said that Barclays turned down several approaches to do business with First Brands as its credit analysts weren't convinced by the firm's financial projections.

The episode led the London-listed bank to review its loan portfolio, the executive said. "We'll continue to remain very vigilant on this subject," he added.

Barclays also set aside 235 million pounds in the quarter to cover compensation payments under a U.K. car-loan program that is set to cost the industry around 11 billion pounds. While the group stopped providing this kind of financing in 2019 and already set aside 90 million pounds for the matter, the regulator this month shared details of a redress plan for customers who took out car loans and paid certain commissions to dealerships without being properly informed about them over a period dating back almost two decades.

Despite these extra charges, Barclays was upbeat about its future prospects, with stable income supporting a stronger outlook. The bank increased its guidance for net interest income--the difference between what banks earn on loans and what they pay clients for deposits--excluding its investment bank and head office to more than 12.6 billion pounds compared with greater than 12.5 billion pounds previously.

Total income for the three-month period was 9% ahead of the same quarter a year prior at 7.17 billion pounds and beat analysts' projections.

This was boosted by recovery in its U.S. consumer division, which saw double-digit growth and benefited from its acquisition of the General Motors card portfolio. Top-line performance was also supported by its U.K. division, which now includes Tesco Bank's portfolio and continues to benefit from tailwinds from a structural hedge mechanism the bank uses to mitigate the impact of interest-rate moves.

However, its investment bank--a key revenue driver--underperformed compared to its Wall Street peers as it missed out on some of the largest deals in the quarter. The bank also lagged on equity capital markets, where finance chief Anna Cross said it has more to do to gain market share, but saw stable growth in its fixed income, commodity, and currency trading arm.

Barclays also nudged up its return on tangible equity target for 2025 and now expects a RoTE greater than 11%--compared with around that level previously--after reporting 10.6% for the third quarter.

Shares traded around 4% higher in London to as the market cheered the top line beat and fresh buyback.

Venkatakrishnan said he is pleased with momentum of its financial performance as the bank has been implementing cost savings at a faster clip than forecast, allowing it to bring forward a portion of its planned shareholder distributions. Barclays will also move to quarterly share buyback announcements.

Barclays will start a 500 million-pound program as soon as its current one ends, the CEO said. Its common equity Tier 1 ratio--a measure of capital strength--stood at a slightly better-than-expected 14.1% at the end of the period.

The group added that it will unveil targets through to 2028 alongside its full-year results in February.

Write to Elena Vardon at elena.vardon@wsj.com

(END) Dow Jones Newswires

October 22, 2025 06:22 ET (10:22 GMT)

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