Barclays PLC (LSE:BARC) results tomorrow will be accompanied by a strategic review of the business and the results might not be pretty.
Hargreaves Lansdown analysts believe there will be a focus on cost reduction rather than material business changes, especially in the UK which sits well above peers on a cost-to-income basis.
That will mean job cuts, potentially in the much-debated investment bank, and to soften the blow a big hand-out to investors.
Press drops at the weekend suggested this might include a promise to hand out £9bn over the next three years, but it might be at the expense of what is available this year if some deep cost-cutting is unveiled.
“The real question for investors is whether restructuring charges taken over the fourth quarter will impact the expected £890mn buyback – of course, nothing is guaranteed,” said Hargreaves.
Barclays Investment Bank is forecast to have had another weak quarter but the M&A deal wheels are starting to turn again, which might bode well for later in the year.
The investment bank is essentially the residue of one-time Wall St legend Lehman Brothers, which Barclays picked up for a song just after it collapsed during the 2008 financial crash.
True to its history, earnings here are volatile and too much so for many investors, including Shawbrook which waged an unsuccessful campaign to spin the merchant bank arm off.
Barclays has been rock solid in its support of the investment arm up to now and changing its tune will require a skilful explanation from chief executive CS Venkatakrishnan, though the recent acquisition of Tesco Bank possibly points to the direction it is heading.
Profits for the year are forecast at around US$7.3bn, up 3% but as with all the banks that depends on what particular line of the P&L you choose.