Raphael Stevens

British bank Barclays posted a rise in full-year pre-tax profit that came in just ahead of analyst expectations, while also launching a £1 billion share buyback.
Pretax profit rose by 24% to £8.108 billion in 2024, just above analyst expectations of £8.081 billion, according to LSEG. 

Chris Ratcliffe | Bloomberg | Getty Images

Shares of British bank Barclays sank in early Thursday trade, after the lender’s forward guidance failed to impress despite its full-year pre-tax profit beat.
Pretax profit rose by 24% to £8.108 billion in 2024, just above an analyst forecast of £8.081 billion, according to LSEG. 

Net profit attributable to shareholders also picked up by 24% to £5.316 billion in 2024, but fell short of the £5.449 billion expected by analysts. Fourth-quarter attributable profit came in at £965 million, below the £994 million analyst outlook for the period.
The lender’s total income picked up to £6.96 billion in the three months to the end of December, versus £5.6 billion in the fourth quarter of 2023, with the core Barclays investment and retail units logging 28% and 46% year-on-year hikes to £2.61 and £2.62 billion, respectively.
The group’s return on tangible equity, a measure of profitability, averaged 10.5% in 2024, up from 9% in the previous year — as the bank set out targets for an increase to around 11% in 2025 and to more than 12% in 2026.
The bank also sets out to achieve a net interest income (NII) — a key profitability metric that indicates the money a bank made from loans after deducting the interest paid on deposits — of  £7.4 billion across its retail unit this year, in line with expectations cited by Citi analysts.
“New 2025 guidance for NII, cost-income and RoTE are all broadly in-line with consensus, while 2026 targets are unchanged. Overall a solid set of results, but little new to get excited about either. This, plus the strong run up in the share price over the past year, may temper any initial reaction, but the stock still appears inexpensive in our view,” they said.

RBC’s Benjamin Toms told CNBC that, coming into the results, anticipation had built that Barclays could improve its outlook compared with the bank’s 2024 strategic plan — yet, instead, “the messaging today was very much a reiteration of existing guidance.”
“There was a slight disappointment around NII guidance. But our takeaway from the presentation is that management are probably being a bit conservative here,” he added.
“The results themselves look satisfactory but the outlook is disappointing. In particular there is no change to FY26 targets (we expected increased capital return) and FY25 targets look in-line with consensus except for a slight downgrade to Banking NII – surprising given the Q4 beat,” KBW analysts said in a note.
Barclays shares were down 5.51% by 12:08 p.m. London time.

Restructuring

Since last year, Barclays has been implementing a strategic overhaul to whittle down costs by £2 billion by 2026, lift shareholder returns and stabilize financial returns, sharpening its focus on the profitable consumer and lending operations — and leading to the absorption of the retail banking business of British grocer Tesco’s.
Yet Barclays’ traditionally strong banking unit could now stand to benefit from more open market share in the domestic space, as HSBC last month announced it is preparing to exit its M&A and equity capital markets businesses in Europe, the U.K. and the U.S. amid a larger restructure of its investment banking operations.
The bank has also been recovering from a sweeping three-day tech outage that disrupted payments and transactions at the end of last month, which has since been resolved.
More broadly, lenders have been battling lethargy in the U.K. economy and a pullback in IPO activity in the London Stock Exchange. The Bank of England executed its first rate cut of the year last week and signaled further trims in 2025 amid a downgrade in the U.K.’s economic forecast — with monetary easing typically eating away at bank profits, as it tightens the spread between lenders’ return in loans and their payout on deposits. British and European banks are also struggling to keep pace with counterparts in the U.S., which could benefit from an additional competitive edge if newly inaugurated U.S. President Donald Trump takes a lighter approach to local regulation.
In parallel, U.K. Finance Minister Rachel Reeves is prodding Britain’s Financial Conduct Authority toward promoting competitiveness in tandem with consumer protection, with markets eyeing the government’s Financial Services Growth and Competitiveness Strategy due out in spring. More

Commerzbank on Thursday announced it will eliminate 3,900 full-time positions by 2028, largely in its native Germany, as it unveiled a spate of new strategic targets.
Commerzbank CEO Bettina Orlopp told CNBC’s Annette Weisbach after the news that it was important the job cuts were done in a “very social, responsible way.”
Germany’s second-largest lender anticipates around 700 million euros ($730.7 million) of before-tax restructuring costs in 2025, targeting a net result of 2.4 billion euros after these charges for the year.

Germany’s second-largest lender Commerzbank on Thursday announced it will eliminate 3,900 full-time positions by 2028, largely in its native Germany, as it unveiled a spate of new strategic targets.
The job cuts will be accompanied by increases in staffing in “selected areas” such as in international locations, resulting in a broadly constant global headcount of 36,700, the bank said in its strategic update.

Commerzbank CEO Bettina Orlopp told CNBC’s Annette Weisbach after the news that it was important the job cuts were done in a “very social, responsible way.” She added that she believes the reductions can take place “without weakening the morale, which is actually really, really good.”
The lender anticipates around 700 million euros ($730.7 million) of before-tax restructuring costs in 2025, targeting a net result of 2.4 billion euros after these charges for the year. It plans a payout ratio of more than 100% over the 2025-2028 period, after the deduction of restructuring costs and Additional Tier 1 (AT 1) bond coupons.
The bank also raised its longer-term revenue goals to 3.8 billion euros in 2027, up from a previous forecast of 3.6 billion euros, and said it is now targeting a higher return of tangible equity rate — a profitability metric — of 13.6% in the year, from 12.3% previously.
Commerzbank had disclosed its “record” annual performance two weeks before the scheduled release of its financial results, in a bid to fall in step with German legal requirements when a company’s capital return significantly exceeds the expectations of capital markets.
At the time, it said net profit hiked by 20% to a forecast-beating 2.68 billion euros ($2.78 billion) in 2024, outlining plans to repurchase 400 million euros of shares and boost its dividend payout to 0.65 euros per share, compared with 0.35 euros per share in the previous year. Full-year revenue in 2024 came in at 11.1 billion euros, compared with 10.461 billion euros in 2023, the bank said Thursday.

“We have delivered, consequently, over the past four years, what we have promised, and we intend to do that also in the coming years,” Orlopp said Thursday.
Deutsche Bank analysts said the “relatively linear” planned progress to Commerzbank’s new mid-term target is a “positive,” noting the spate of “bullish new targets.”
Commerzbank shares are up 21.8% year to date and were 0.68% higher at 11:34 a.m. London time on Thursday.

‘Activist investor’

Commerzbank has been advocating its case to stand alone since last year’s surprise build of a stake by UniCredit fueled market talk that Italy’s second-largest lender could be on the hunt for a cross-border takeover. UniCredit currently holds a direct 9.5% stake and a 18.5% stake via derivatives in Commerzbank.
The German government has opposed the prospect of such a cross-border consolidation, with Finance Minister Jörg Kukies slamming UniCredit’s “very aggressive, very opaque” bid in a CNBC interview in January.
Split between the German overture and a takeover offer for Italian lender Banco BPM, UniCredit CEO Andrea Orcel has kept his cards close to his chest over his company’s ultimate intentions regarding Commerzbank.
Speaking to CNBC on Thursday, Orlopp said that Commerzbank has a dialogue with UniCredit, which it views as a shareholder.
“At the moment, we can only treat them as investors, and that we do, and we are very open to answer their questions,” she noted. “Beside that, we said, if we want to talk about anything else, like a combination, given that we have a situation where we have one side who has secured nearly 30% of the shares in our company, we expect kind of an outline draft of what they think they would like … to achieve with respect to the structure, with respect to the financials, and then we are also open to talks.”
UniCredit “feels a little bit like an activist investor, yeah, that’s true. It’s all about style,” Orlopp added.
Speaking to CNBC this week after UniCredit reported a fourth-quarter profit beat and guided a slowdown in 2025 revenues, Orcel stressed that Commerzbank remains an investment — but also that he is “quite optimistic of being able to convince everybody, not only on the premises of how we got to this investment, but also that a combination between the two banks has massive value to be created, not only for the two banks and the stakeholders, but also for Germany and for Europe.” More

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At a summit in Paris on February 10th and 11th, tech bosses vied to issue the most grandiose claim about artificial intelligence. “AI will be the most profound shift of our lifetimes,” is how Sundar Pichai, Alphabet’s boss, put it. Dario Amodei, chief executive of Anthropic, said that it would lead to the “largest change to the global labour market in human history”. In a blog post, Sam Altman of OpenAI wrote that “In a decade perhaps everyone on earth will be capable of accomplishing more than the most impactful person can today.” More

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Eight automakers including BYD, at least nine financial securities companies, three state-owned telecommunications operators and smartphone brand Honor are among the many that have rushed to integrate with DeepSeek in the last week.
“This is quite unprecedented,” Wei Sun, principal analyst of artificial intelligence at Counterpoint Research, said in an email Monday. She pointed to the rate of adoption, scale of business integration and breadth of specific industries covered.
A big factor in the widespread interest is timing, as well as DeepSeek’s open-source availability in China.

Dado Ruvic | Reuters

BEIJING — Chinese businesses are tapping DeepSeek’s newest artificial intelligence model to see how it can improve productivity.
The Chinese AI model took the world by storm in recent weeks after showcasing its reasoning process and claims to undercut rival OpenAI’s ChatGPT on cost — despite U.S. restrictions on Chinese access to the advanced semiconductors needed to develop the tech.

Eight automakers including BYD, at least nine financial securities companies, three state-owned telecommunications operators and smartphone brand Honor are among the many that have rushed in the last week to integrate with DeepSeek. Cloud computing operators Alibaba, Huawei, Tencent and Baidu have all offered ways for clients to access DeepSeek’s latest model.
“This is quite unprecedented,” Wei Sun, principal analyst of artificial intelligence at Counterpoint Research, said in an email Monday. She pointed to the rate of adoption, scale of business integration and breadth of specific industries covered.
“When we have all of these, we know it’s making a big social and economic impact,” she said.

Optimism over artificial intelligence has spread to Chinese stocks. UBS said Wednesday that AI-related Chinese stocks are up by 15% since the start of the year, outperforming the broader MSCI China Index by 9%.
A big factor in the widespread interest is timing. DeepSeek released its latest R1 model on Jan. 20, and news of its low-cost reasoning capabilities prompted a global tech stock sell-off on Jan. 27 — just as millions of urban workers in China were returning to their hometowns to celebrate the eight-day Lunar New Year holiday.

As a result, less developed parts of China gained greater understanding of AI and its impact, a topic previously limited to conversations in China’s largest cities, said Wenhao Zhang, CEO of the Beijing-based consumer marketing consultancy Doodod.
“It’s a major education of the market. This will push the entire ecosystem’s development,” he said Tuesday in Mandarin, translated by CNBC.
Zhang, who studied AI at Tsinghua University, founded Doodod in 2012 to build customer engagement through social media analysis. He said the company — which counts China Merchant’s Bank and Toyota as clients — started looking at DeepSeek’s offerings late last year, and began using it more after the R1 release in late January.
DeepSeek, founded in 2023 out of a quantitative hedge fund, had released a basic version of R1 in November, and a V3 model in December. It launched a smartphone chatbot app in January.

Open-source local deployment

Another attractive factor for businesses is that DeepSeek’s models are open-source, allowing individuals and companies to download and customize it.
DeepSeek also advertised drastically lower prices for applications to use its tech versus that of OpenAI. ChatGPT is not officially available in mainland China and requires users to provide an overseas phone number and payment method from a supported country such as the U.S.
DeepSeek changed the perception that AI models only belong to big companies and have high implementation costs, said James Tong, CEO of Movitech, an enterprise software company which says its clients include Danone and China’s State Grid.
He said Movitech started integrating an earlier version of DeepSeek in the fourth quarter of last year, helping boost sales by about 25% from the same period in 2023. The company plans to launch a new DeepSeek-integrated application by the end of March to improve clients’ ability to make decisions, he said.
Many recent videos on Chinese social media have showed off how to run a local version of DeepSeek on Apple’s Mac mini.
Apple Mac mini online sales in China climbed significantly from November to January, versus the same period the year prior, according to data from consultancy WPIC. The electronics-focused JD.com site recorded unit sales of around 20,200 in January, up from nearly 19,400 in December and around 12,250 in November, the data showed.
DeepSeek’s affordability is pressuring more expensive AI models to cut prices, enabling more businesses to adopt the tech, said Chim Lee, senior Asia analyst at the Economist Intelligence Unit. He added that open-source models allow finance, banking and healthcare businesses — which are subject to stringent data protection rules in China — to develop AI applications locally.
“It is still very early to point to concrete business applications, but a key takeaway is that DeepSeek will accelerate the commoditization of AI,” Lee said.
Beijing is also increasing support. China’s national supercomputing network announced Tuesday that eligible companies and individuals can obtain three free months of DeepSeek access, along with subsidized computing power.
The network is similar to OpenAI’s Trump-backed Stargate project in the U.S. for building AI infrastructure — with the potential for “even faster scaling,” Winston Ma, adjunct professor at NYU School of Law said Wednesday. He is also the author of “The Digital War: How China’s Tech Power Shapes the Future of AI, Blockchain and Cyberspace.” 

Not centered on DeepSeek

The rush to try out DeepSeek doesn’t mean it will be the only AI provider for Chinese companies. Developers in the U.S. and China are regularly releasing new models.
Movitech also uses Alibaba’s Qwen AI model, Tong said, noting that the market wants the tech that can lower costs and produce results the most, whether it’s OpenAI or DeepSeek.
HangHang AI, which has invested several hundred million yuan to develop AI solutions for companies across 20 industries, uses a range of models, said partner and COO Shu Weibing.
Many people first used “Baidu, then realized it wasn’t as good as Kimi, then it wasn’t as good as [ByteDance’s] Doubao, which also cut prices,” Shu said in Mandarin, translated by CNBC. “Now it’s DeepSeek.”
It remains to be seen how much generative AI can boost productivity and profits.
Shu predicts that small businesses and companies that integrate AI with hardware will benefit more than large, consumer-facing internet platforms, whose AI work so far, he said, has focused more on boosting efficiency rather than creating new consumer services.
Despite AI models’ falling prices, “small and medium-sized businesses may still be in a period of wait-and-see” for adopting the tech due to the relatively high cost for a full deployment, including computing power and customization, Mike Fang, senior director analyst at Gartner, said Wednesday in Mandarin translated by CNBC.
But the consulting firm predicts that by 2027, the average price to access a generative AI model will be less than 1% of what it costs now — and that by 2029, 60% of Chinese businesses will have incorporated AI into their primary products and services, forming the top drivers of revenue growth. More