The potential upside to Barclays plc (LON:BARC) will be dependent on the bank receiving credit for excess capital, RBC Capital said in a note to investors today.
“This is unlikely until we have more clarity on the final cost of litigation, the impact of IFRS 9 and the sale of the Barclays Africa stake,” the broker added.
In Barclays full year results last week, the lender said legacy conduct issues remain, including the US Department of Justice's legal proceedings launched against the bank in December on allegations it deliberately mis-sold mortgage bonds.
The IFRS 9 regulation, which cracks down on the way companies report financial results, has forced banks to make significant changes to its data and systems.
Meanwhile, Barclays has cut its stake in Barclays Africa with an initial sale of 12.2% in May. It has agreed separation terms on Barclays Africa with local management, including £765m of contributions over the period through to completion of the next sale of its stake in the business to below 50%.
The disposal is part of a restructuring, which includes offloading less profitable non-core businesses. The lender has brought forward the closure of non-core units by six months to 30 June, which will lower RWAs to £25bn.
On the back the results, RBC has reiterated a ‘sector perform’ rating and lifted its target price to 230p from 220p.