These UK shares are set to release fresh financial details over the next couple of weeks. Is now the time to buy in? Or should you give them a very wide berth?
Imminent third-quarter financials from FTSE 100 banking colossus Barclays are bound to attract plenty of attention. This is a reflection of the blue chip’s standing in its own right as well as its role as a barometer of the health of the British economy. And I have to tell you that I’m not too optimistic over what they’ll show.
UK banks have already been forced to suck up gigantic impairments resulting from the Covid-19 crisis. Barclays itself announced it had booked £3.7bn worth of credit impairments in its half-year trading update in July. Profits at the bank sunk to £1.3bn between January and June from £3bn a year earlier, too. I fear another shocking set of numbers when that quarter three statement comes out on Friday, October 23.
I don’t think there’s much incentive to buy Barclays shares today. Its forward price-to-earnings (P/E) ratio of 20 times fails to reflect the possibility of its current travails stretching well into 2021 and possibly beyond, too. As well as Covid-19, of course, the Footsie bank also faces a significant threat from a disorderly Brexit at the end of December.
On top of this, Barclays and its peers also face the prospect that the Bank of England will hold interest rates at rock-bottom levels for years to come to support the UK economy. The central bank might even introduce negative rates soon if very-public chatter from key policymakers is to be believed. In my opinion Barclays simply offers too much risk. I fully expect its long-term share price downtrend to continue.