Finance

Analysis of Barclays PLC
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Abstract
Barclays PLC is a financial institution that provides various services to its customers. The institution offers the following services in a nutshell; banking services, discounting services safekeeping of valuable items like land title deeds, retailing services, lending services to investors, with extensive international recognition. The Barclays company has experienced some ups and down like a loss of $1.8billion in the second quarter of 2016. The British Bank has also experienced some leadership challenges and has brought in three CEOs since 2012according to the New York Times. The confident Mr. Staley who joined the British bank in 2015, however, said that the bank is having pretty well progress. The bank has overseas branches though it is cutting down some of these branches as non-operational, and the bank has employees of about 119,300.
The bank is listed on the New York Stock Exchange; its shares are floated with the NYSE. The bank have various competitors like BNP Paribas; it has price earnings ratio, dividend yield. These are indicators of how profitable the company is. Furthermore, this British company has a promising future for growth, and the company’s ticker symbol is BCS. The bank itself not to forget has made recommendable progress in the field of banking.
Keywords price-earnings ratio, dividend and dividend yield, stock investment, ticker symbol, indicators of profitability of a company, company growth.

There are several reasons as to why the analysis of this Barclays bank is done and not any other financial institutions or company. The company has been experiencing some management challenges since 2012 according to New York Times and there is a keen interest on how the company is making a turnaround in terms of management by bringing Mr. Staley who has promised in New York Times to be near or heading to pretty progress despite the loss that was recorded in the second quarter of 2016 of $ 1.8 billion . To continue, Barclays bank has ordinary share type in the stock market (NYSE), and 100 volume of traded shares. All these occurrences and stocks in the Barclays bank has created a mind of curiosity. This British company has also attracted attention due to its overwhelming oversea branches like in African countries like Kenya. There are other several reasons as to why this bank is analyzed but there is one last one that is very shocking, according to the Fine Extra article, there was recently dismissed Barclays bank worker due to investigation by a financial regulator into banks forex exchange practices where the banked was ordered to pay the worker and dismiss him immediately . The bank also has shown some indicators of progress by closing non-operational branches in African and other places. Finally, the bank also has 325 years of history and expertise in banking with its operations over 40 countries with employees of about 85000 according to Barclay’s website.
There are various opinions concerning the Bank under analysis with the latest being the firing of the bank’s employee and the bank being fined $150 due to misconduct of banks use of “last look” tool which is embedded into the most banks electronic forex trading system. There are other articles that consider Barclays as a good investment for property for various investors. Either way, there are both negative and positive opinions. The negative one is outrageous cries of customers of miss sells, however, these customers have been promised compensation by the giant bank said one of the directors. And also there has been a closure of some of the branches of the bank that the management has termed non-core operations said Mr. Staley who joined the giant company in 2015 according to the New York Times. The closure of this branches is to cut on operational expenses by the branches on account of money send to branch accounts by their head offices majorly.
Risk relates to uncertainty surrounding the investment decision. The investor is uncertain whether the investment will bring a loss or gain after the expected payback period. Here we have pessimist and optimist mentality regarding uncertainty involved in investing. Therefore there is either high risk or lower risk involved in investing. Investment deals with what you want to do with your financial assets. There are several kinds of risks, like liquidity risk and concentration risk with the first one relating to how quick or first the stock can be converted to cash and the latter dealing with investing all stocks in the same market like the saying goes putting financial eggs in one bucket (Cole, C.W.2007). Now investing in stock has higher risk and lower risk. Investment has higher risks like market risks that are uncertainty surrounding investment; we have corporate decisions that also involves taking risks.
For an international company like Barclays bank, there are higher risks involved like political risk, difference, and change in currency. Now, these risks influence the decisions as to whether to invest or not. Price level changes due to inflations rate also pose risks to several investors.
There are also low risks involved in investing in stock; these risks are; misconduct by officers in the stock departments, the floating of shares to the public can be costly to the investing companies just to mention two. In conclusion, investing in stock has both low and higher risks, and it all depends on the discretion of the company, the company can decide to invest in high / low- risk stock depending on the return on investment.
Barclays Company is a large corporation with 119300 employees; the company operates in 40 countries. The public limited company is large as compared to its competitors like BNP Paribas, Credit Suisse. This is because the size of a company is analyzed by the number of employees and the floor area covered, capital investment, etc. Barclays has a market cap of $45.4 billion as At May 2017 and sales of $29.19 billion (Staff, F.M, &Gross, D1997) while Paribas Global entrepreneurs report $ 40 billion. Therefore Barclays is large as compared to other firms.
Barclays is fast growing as compared to other companies, it operates in 40 countries, with many overseas branches in Africa, and we have for example Barclays Kenya, Uganda in Africa. The company according to Kingly Brookes launched 100million pounds to fund fast growing Tech Company in the United Kingdom; this means that the bank has diversified business and its services. The company also is willing to lend 5 million pounds to Tech companies according to the report given by the article.
Financial Times reports that Barclay’s pre- tax profit is almost tripling to 3.2 billion pounds.
The company’s group return on tangible equity is 8.4%, cost return is 4.8% as at 2015 financial statement, and its income ratio is 84% that is close to 3.2 billion pounds. The dividend rate is 0.20 %. All these show the profitability of Barclays bank.
The current price earnings ratio relates to valuation of a company that measures its share price against the current share price in the market. Now Barclays has a price-earnings ratio of 23. This signifies capability of potential investors to give $23 for every $1. If the price-earnings ratio is higher, shows that the company is capable of yielding higher returns shortly while small market value per share ratios alerts investors that they risk losing their capital on investment. Therefore this P/E ratio influence investment decision of any investor.
Barclays Company has dividends for its shareholders, and the dividend yield is 1.77% according to investor’s hub report on Barclays bank. This indicates that the bank makes a good profit and pays shareholders sufficient return. The future of this company appears promising because it earns its shareholders high dividends, has good Price-earnings ratio. The Company also has a potential for future growth because it can attract potential investors due to its high capacity price-earnings ratio.
In conclusion, the Barclays Company is a company despite challenges it faced back then is doing well in terms of return on investment, and incomes to shareholders in terms of dividends. The company also has good prospects of growth in many countries above 40 countries as per now.
References
Cole, C. W. (2007). Financial Industry Regulatory Authority (FINRA): Is the Consolidation of NASD and the Regulatory Arm of NYSE a Bull or a Bear for US Capital Markets. UMKC L. Rev., 76, 251.
Staff, F. M., & Gross, D. (1997). Forbes? Greatest Business Stories of All Time. John Wiley & Sons.
Craven, B. M., & Marston, C. L. (1999). Financial reporting on the Internet by leading UK companies. European Accounting Review, 8(2), 321-333.
Brennan, M. J., & Tamarowski, C. (2000). Investor relations, liquidity, and stock prices. Journal of Applied Corporate Finance, 12(4), 26