Finance

Deutsche Bank on Wednesday reported a third-quarter net profit of 1.031 billion euros ($1.06 billion), slightly beating expectations despite an 8% fall on the previous year and ongoing struggles in the lender’s investment unit.
Analysts had expected a quarterly net profit attributable to shareholders of 997 million euros, according to LSEG data.
Net profit was 35% higher on the prior quarter despite the year-on-year dip. It was Deutsche Bank’s thirteenth straight profitable quarter since its large-scale restructuring launched in 2019.

Deutsche Bank shares popped on Wednesday, after the lender slightly beat expectations with its thirteenth straight profitable quarter and said it would increase and accelerate shareholder pay-outs.
Third-quarter net profit was 1.031 billion euros ($1.06 billion), above an analyst consensus of quarterly net profit attributable to shareholders of 997 million euros, according to LSEG data.

Shares were 7% higher at 8:33 a.m. London time.
The bank’s third-quarter net profit was down 8% on the previous year and up 35% on the quarter, amid ongoing struggles in the lender’s investment unit.
For the same period in 2022, the German lender recorded a net profit of 1.115 billion euros on the back of higher interest rates and increased market volatility that boosted its fixed income and currencies trading business.
The bank said it was expecting revenues of around 29 billion euros for the full year, at the top end of prior estimates.
It also said it had scope to release up to an additional 3 billion euros in capital and would increase and accelerate shareholder distributions.

It delivered a strong performance in its corporate banking business — which benefits from the higher interest rate environment — where revenues rose 21% year-on-year to 1.89 billion euros.
However, it continued to see a slowdown in its investment arm, where net revenues fell 4% year-on-year to 2.27 billion euros and are down 12% in the first nine months of the year to 7.3 billion.
Deutsche Bank CFO James von Moltke told CNBC’s Silvia Amaro that the investment banking unit’s performance is “pretty much in line with the market” on an underlying basis.
“What’s going on is the normalization of fixed income and currency revenues that we called for, especially in the macro businesses, so rates, foreign exchange and emerging markets, which benefited last year from the very high levels of volatility,” von Moltke said.
There has been a rotation of the bank’s activity focusing onto other products, notably credit and financing, which have seen strength, he said.
Other highlights for the quarter:

Total revenues stood at 7.13 billion euros, up from 6.92 billion in the third quarter of 2022.

The provision for credit losses was 200 million euros, compared to 350 million in the same quarter of last year.
Common equity tier one CET1 capital ratio, a measure of financial resilience, was 13.9% versus 13.8% at the end of the second quarter and 13.3% in the third quarter of 2022.
Return on tangible equity stood at 7.3%, up from 5.4% the previous quarter.

Analysts at UBS said Deutsche Bank had delivered a “major improvement in capital” and “robust operational performance,” flagging that pre-tax profit of 1.723 billion euros was 9% above consensus.
Numerous challenges remain for the bank, including a weakening European business environment, macro uncertainty and IT issues at two of its retail units. More

Wall Street leaders speaking at the annual Riyadh event broadly expressed varying degrees of pessimism and caution for the coming year.
Carlyle Group CEO Harvey Schwartz stressed the presence of alpha opportunities even in the face of high interest rates and geopolitical conflict.

Several of Wall Street’s biggest names convened in Riyadh, Saudi Arabia, for the kingdom’s annual Future Investment Initiative, during which they weighed in on risks and opportunities for investors and the global economy.
Bankers speaking on panel discussions notably stressed headwinds — particularly in the short term — from multiple wars, an economic slowdown and an environment of high inflation and high fiscal deficits.

When asked about the risk outlook, Carlyle Group CEO Harvey Schwartz, former president of Goldman Sachs, advised caution but remained positive about alpha opportunities. Carlyle Group is one of the world’s largest private equity firms.
“I think this particular period, as we come out of a period of basically yield curve manipulation — which was done I think for very thoughtful reasons — but now we’re shifting out of that into a totally different regime, I think there’s reason for caution,” he said.
“But I think the year ahead will certainly present incredible alpha opportunities. But generally speaking I think we’ll have more of a headwind than a tailwind, and my own personal view is as we adjust to this rate regime, I think there are going to be more challenges in the near term. It doesn’t mean there won’t be great alpha opportunities.”
In a drive to combat the surging inflation that followed massive Covid-19 economic stimulus around the world, central banks have carried out the steepest interest rate increases in decades. Monetary policymakers have hiked rates “by about 400 basis points on average in advanced economies since late 2021, and around 650 basis points in emerging market economies,” according to the International Monetary Fund.
This dynamic increases credit risk, making it harder for people and businesses to borrow. Schwartz also highlighted the need to stay liquid in times of war to be best prepared for uncertainty.

“I think certain geopolitical risk, particularly war — again the tragedy of war and the loss of life — I think those are very difficult to price in the near term. Regardless of the conflict or where it is in the world,” he said.

“And I think you have to incorporate that into your risk assessment … if your appetite for risk is high, I think you can incorporate one way, if your appetite risk is low, then I think being much more liquid and being prepared for more uncertain outcomes, non-linear risk. You have to be prepared for those.”
In an earlier panel at the same event, JPMorgan CEO Jamie Dimon stressed the dangers of the present, particularly nuclear proliferation and war, as well as the U.S. having one of the largest peacetime fiscal deficits in its history. Bridgewater Associates founder Ray Dalio, for his part, said he was pessimistic about the global economy, pointing to war, widening wealth gaps and growing societal divides.

Schwartz, however, expressed optimism about the longer term, pointing to what he called big drivers of activity: advances in health and longevity, technology and artificial intelligence, and the energy transition.
“I think those are really significant drivers of economic activity, innovation, growth; they’re going to need lots of capital, we’ll need amazing thought leaders, we’ll need lots of global cooperation. And it’s hard not to be here today in the kingdom,” he added, “particularly this morning hearing Yasir (Al-Rumayyan, Saudi Public Investment Fund chief) speak, and not feel enthusiastic about the opportunity set.” More

JPMorgan Chase CEO Jamie Dimon on Tuesday warned about the dangers of locking in an outlook about the economy.
“Prepare for possibilities and probabilities, not calling one course of action, since I’ve never seen anyone call it,” the head of the largest U.S. bank by assets said in Saudi Arabia.
Dimon added that he doesn’t think it makes any difference whether the Fed hikes rates another quarter point.

Jamie Dimon, CEO of JPMorgan Chase speaking with CNBC’s Leslie Picker in Bozeman, MT on Aug. 2nd, 2023.

JPMorgan Chase CEO Jamie Dimon on Tuesday warned about the dangers of locking in an outlook about the economy, particularly considering the poor recent track record of central banks like the Federal Reserve.
In the latest of multiple warnings about what lies ahead from the head of the largest U.S. bank by assets, he cautioned that myriad factors playing out now make things even more difficult.

“Prepare for possibilities and probabilities, not calling one course of action, since I’ve never seen anyone call it,” Dimon said during a panel discussion at the Future Investment Initiative summit in Riyadh, Saudi Arabia.
“I want to point out the central banks 18 months ago were 100% dead wrong,” he added. “I would be quite cautious about what might happen next year.”
The comments reference back to the Fed outlook in early 2022 and for much of the previous year, when central bank officials insisted that the inflation surge would be “transitory.”
Along with the misdiagnosis on prices, Fed officials, according to projections released in March 2022, collectively saw their key interest rate rising to just 2.8% by the end of 2023 — it is now north of 5.25% — and core inflation at 2.8%, 1.1 percentage points below its current level as measured by the central bank’s preferred gauge.
Dimon criticized “this omnipotent feeling that central banks and governments can manage through all this stuff. I’m cautious.”

Much of Wall Street has been focused on whether the Fed might enact another quarter percentage point rate hike before the end of 2023. But Dimon said, “I don’t think it makes a piece of difference whether the rates go up 25 basis points or more, like zero, none, nada.”
In other recent warnings, Dimon warned of a potential scenario in which the fed funds rate could eclipse 7%. When the bank released its earnings report earlier this month, he cautioned that, “This may be the most dangerous time the world has seen in decades.”
“Whether the whole curve goes up 100 basis points, I would be prepared for it,” he added. “I don’t know if it’s going to happen, but I look at what we’re seeing today, more like the ’70s, a lot of spending, a lot of this can be wasted.” (One basis point equals 0.01%.)
Elsewhere in finance, Dimon said he supports ESG principles but criticized the government for playing “whack-a-mole” with no concerted strategy.
“You can’t build pipelines to reduce coal emissions. You can’t get the permits to build solar and wind and things like that,” he said. “So we better get our act together.”
Don’t miss these CNBC PRO stories: More

Millions of people pick their health insurance during open enrollment. Consumers are generally locked into their choice for a year.
Health plans come with premiums, co-insurance, deductibles, out-of-pocket maximums and other moving parts that make it tricky to choose the best insurance.
A 2017 study found that 61% of consumers inadvertently chose plans that lost them money.

Sdi Productions | E+ | Getty Images

Many people will soon be picking their health insurance plans for 2024: November is a common month for workplace open enrollment, and the public marketplace opens Nov. 1.
But choosing a health plan can be tricky.

In fact, a 2017 study found many people lose money due to suboptimal choices: Sixty-one percent chose the wrong plan, costing them an average $372 a year. The paper, authored by economists at Carnegie Mellon University and the Wisconsin School of Business, examined choices made by almost 24,000 workers at a U.S. firm.
More from Personal Finance:’Cash stuffing’ may forgo ‘easiest money’ you can makeThese credit cards have had ‘increasingly notable’ high ratesHome ‘affordability is incredibly difficult,’ economist says
Health plans have many moving parts, such as premiums and deductibles. Each has financial implications for buyers.
“It is confusing, and people have no idea how much they could potentially have to pay,” Carolyn McClanahan, a certified financial planner and founder of Life Planning Partners, based in Jacksonville, Florida, previously told CNBC. McClanahan is also a medical doctor and a member of CNBC’s FA Council.
Making a mistake can be costly; consumers are generally locked into their health insurance for a year, with limited exception.

Here’s a guide to the major cost components of health insurance and how they may affect your bill.

1. Premiums

Frederic Cirou | Photoalto | Getty Images

The premium is the sum you pay an insurer each month to participate in a health plan.
It’s perhaps the most transparent and easy-to-understand cost component of a health plan — the equivalent of a sticker price.
The average premium paid by an individual worker was $1,401 a year — or about $117 a month — in 2023, according to a survey on employer-sponsored health coverage from the Kaiser Family Foundation, a nonprofit. Families paid $6,575 a year, or $548 a month, on average.
Your monthly payment may be higher or lower depending on the type of plan you choose, the size of your employer, your geography and other factors.

Low premiums don’t necessarily translate to good value. You may be on the hook for a big bill later if you see a doctor or pay for a procedure, depending on the plan.
“When you’re shopping for health insurance, people naturally shop like they do for most products — by the price,” Karen Pollitz, co-director of KFF’s program on patient and consumer protection, previously told CNBC.
“If you’re shopping for tennis shoes or rice, you know what you’re getting” for the price, she said. “But people really should not just price shop, because health insurance is not a commodity.”
“The plans can be quite different” from each other, she added.

2. Co-pay

Luis Alvarez | Digitalvision | Getty Images

Many workers also owe a copayment — a flat dollar fee — when they visit a doctor. A “co-pay” is a form of cost-sharing with health insurers.
The average patient pays $26 for each visit to a primary-care doctor and $44 to visit a specialty care physician, according to KFF.

3. Co-insurance

Patients may owe additional cost-sharing, such as co-insurance, a percentage of health costs that the consumer shares with the insurer. This cost-sharing generally kicks in after you’ve paid your annual deductible (a concept explained more fully below).
The average co-insurance rate for consumers is 19% for primary care and 20% for specialty care, according to KFF data. The insurer would pay the other 81% and 80% of the bill, respectively.
As an example: If a specialty service costs $1,000, the average patient would pay 20% — or $200 — and the insurer would pay the remainder.
Co-pays and co-insurance may vary by service, with separate classifications for office visits, hospitalizations or prescription drugs, according to KFF. Rates and coverage may also differ for in-network and out-of-network providers.

4. Deductible

Selectstock | E+ | Getty Images

Deductibles are another common form of cost-sharing.
This is the annual sum a consumer must pay out of pocket before the health insurer starts to pay for services.
Ninety percent of workers with single coverage have a deductible in 2023, according to KFF. Their average general annual deductible is $1,735.
The deductible meshes with other forms of cost-sharing.
Here’s an example based on a $1,000 hospital charge. A patient with a $500 deductible pays the first $500 out of pocket. This patient also has 20% co-insurance, and therefore pays another $100 (or, 20% of the remaining $500 tab). This person would pay a total $600 out of pocket for this hospital visit.

When you’re shopping for health insurance, people naturally shop like they do for most products — by the price.

Karen Pollitz
co-director of the program on patient and consumer protections at the Kaiser Family Foundation

Health plans may have more than one deductible — perhaps one for general medical care and another for pharmacy benefits, for example, Pollitz said.
Family plans may also assess deductibles in two ways: by combining the aggregate annual out-of-pocket costs of all family members, and/or by subjecting each family member to a separate annual deductible before the plan covers costs for that member.
The average deductible can vary widely by plan type: $1,281 in a preferred provider organization (PPO) plan; $1,200 in a health maintenance organization (HMO) plan; $1,783 in a point of service (POS) plan; and $2,611 in a high-deductible health plan, according to KFF data on single coverage. (Details of plan types are outlined below.)

5. Out-of-pocket maximum

Rawlstock | Moment | Getty Images

Most people also have an out-of-pocket maximum.
This is a limit on the total cost-sharing consumers pay during the year — including co-pays, co-insurance and deductibles.
After you’ve paid the out-of-pocket maximum amount for the year, “the insurer can’t ask you for a co-pay at the doctor or pharmacy, or hit you for more deductibles,” Pollitz said. “That’s it; you’ve given your pound of flesh.”
About 99% of workers with single coverage are in a plan with an out-of-pocket maximum in 2023, according to KFF.
The range can be large. For example, 13% of workers with single coverage have an out-of-pocket maximum of less than $2,000, but 21% have one of $6,000 or more, according to KFF data.
Out-of-pocket maximums for health plans purchased through an Affordable Care Act marketplace can’t exceed $9,100 for individuals or $18,200 for a family in 2023.

6. Network

Health insurers treat services and costs differently based on their network.
“In network” refers to doctors and other health providers who are part of an insurer’s preferred network. Insurers sign contracts and negotiate prices with these in-network providers. This isn’t the case for “out-of-network” providers.
Here’s why that matters: Deductibles and out-of-pocket maximums are much higher when consumers seek care outside their insurer’s network — generally about double the in-network amount, McClanahan said.
Further, there’s sometimes no cap at all on annual costs for out-of-network care.
“Health insurance really is all about the network,” Pollitz said.
“Your financial liability for going out of network can be really quite dramatic,” she added. “It can expose you to some serious medical bills.”

Some categories of plans disallow coverage for out-of-network services, with limited exception.
For example, HMO plans are among the cheapest types of insurance, according to Aetna. Among the tradeoffs: The plans require consumers to pick in-network doctors and require referrals from a primary care physician before seeing a specialist.
Similarly, EPO plans also require in-network services for insurance coverage, but generally come with more choice than HMOs.
POS plans require referrals for a specialist visit but allow for some out-of-network coverage. PPO plans generally carry higher premiums but have more flexibility, allowing for out-of-network and specialist visits without a referral.  
“Cheaper plans have skinnier networks,” McClanahan said. “If you don’t like the doctors, you may not get a good choice and have to go out of network.”

How to bundle it all together

Fatcamera | E+ | Getty Images

Budget is among the most important considerations, Winnie Sun, co-founder and managing director of Sun Group Wealth Partners in Irvine, California, previously told CNBC. She’s also a member of CNBC’s FA Council.
For example, would you struggle to pay a $1,000 medical bill if you require health care? If so, a health plan with a larger monthly premium and a smaller deductible may be your best bet, Sun said.
Similarly, older Americans or those who require a lot of health care each year — or who expect to have a costly procedure in the coming year — may do well to pick a plan with a bigger monthly premium but better cost-sharing.
Healthy people who generally don’t max out their health spending every year may find it cheaper overall to have a high-deductible plan, McClanahan said.

Cheaper plans have skinnier networks. If you don’t like the doctors, you may not get a good choice and have to go out of network.

Carolyn McClanahan
certified financial planner and founder of Life Planning Partners

Consumers who enroll in a high-deductible plan should use their monthly savings on premiums to fund a health savings account, advisors said. HSAs are available to consumers who enroll in a high-deductible plan.
“Understand the first dollars and the potential last dollars when picking your insurance,” McClanahan said, referring to upfront premiums and back-end cost-sharing.
Every health plan has a summary of benefits and coverage, or SBC, which presents key cost-sharing information and plan details uniformly across all health insurance, Pollitz said.
“I’d urge people to spend a little time with the SBC,” she said. “Don’t wait until an hour before the deadline to take a look. The stakes are high.”
Further, if you’re currently using a doctor or network of providers you like, ensure those providers are covered under your new insurance plan if you intend to switch, McClanahan said. You can consult an insurer’s in-network online directory or call your doctor or provider to ask if they accept your new insurance.
The same rationale goes for prescription drugs, Sun said: Would the cost of your current prescriptions change under a new health plan? More

Coinbase shares surged Tuesday as investors were buoyed by a court ruling in a bitcoin spot ETF case that could benefit the crypto exchange as well.
The cryptocurrency firm is also due to submit its final answer to the SEC’s response to Coinbase’s motion to dismiss by end of day Tuesday.
Grayscale Bitcoin Trust and MicroStrategy, another crypto-exposed firm, saw double-digit gains in Tuesday morning trading.

Brian Armstrong, CEO of Coinbase, slammed the U.S. Securities and Exchange Commission. He also said the cryptocurrency exchange is looking to invest more outside of the U.S.
Carlos Jasso | Bloomberg | Getty Images

Shares of cryptocurrency exchange Coinbase rose about 6% Tuesday as optimism about a long-awaited bitcoin spot exchange-traded fund approval buoyed the stock. It could be a turning point for the company, which has been sparring with the U.S. Securities and Exchange Commission in Manhattan federal court.
Shares of Grayscale’s Bitcoin Trust also surged in Tuesday morning trading by nearly 5%. Grayscale saw a victory formalized in federal appeals court Monday, when a judge’s mandate that the SEC review the company’s Bitcoin ETF proposal took effect.

Coinbase’s stock price, which was also lifted by that finalized decision, often closely mirrors broader cryptocurrency markets in performance. The company is one of the largest crypto custodians and has been tapped by a host of prospective ETFs, including BlackRock’s proposed Bitcoin ETF, in that capacity.
The SEC has been the subject of both industry and Congressional criticism over its perceived “regulation-by-enforcement” approach. Critics argue that the regulator is punitively targeting cryptocurrency exchanges in the wake of the collapse of FTX, while advocates say many cryptocurrencies are indeed securities and further regulation is not required to establish the SEC’s jurisdiction.
The tussle over jurisdiction has dampened the share prices of crypto-exposed companies. Coinbase is up nearly 119% year to date but remains well off its pre-crypto-winter levels. MicroStrategy, another crypto-exposed firm, saw its shares rise 12% during Tuesday morning trading but remains similarly down compared to 2022 levels.
Coinbase is also due to make one last filing in its motion to appeal. The company moved to dismiss the SEC’s claims in August, arguing in part that the SEC’s lawsuit was both beyond the scope of the SEC’s authority and that the assets in question did not constitute securities under the Howey Test. The SEC responded in turn by continuing to argue that Coinbase “did” intermediate “transactions involving investment contracts.”
Coinbase’s response is due in federal court by the end of Tuesday.Don’t miss these CNBC PRO stories: More

The central government formalized a process for local governments to borrow for the year ahead — starting in the preceding fourth quarter, state media said.
Futures for China stocks were up across the board, with that of Hong Kong-traded stocks up by about 2.5% or more as of Tuesday evening, according to Wind Information data.
Earlier this month, the International Monetary Fund cited real estate woes in lowered its growth forecast for China to 5% this year and 4.2% next year.

Workers assemble mini excavators in a factory of heavy machinery in Suzhou in east China’s Jiangsu province on Oct. 23, 2023.
Future Publishing | Future Publishing | Getty Images

BEIJING — China on Tuesday took steps toward easing financing conditions for local governments, which have been at the crux of recent economic difficulties.
The central government said it formalized a process allowing local governments to borrow funds for the year ahead — starting in the preceding fourth quarter, according to an announcement published by state media.

The State Council, China’s top executive body, would determine the amount a local government could borrow ahead of time, the report said, noting the framework would last for four years, through to the end of 2027.
The measure was adopted at a meeting of the National People’s Congress Standing Committee, according to state media.
The move helps stabilize fiscal policy, said Xu Hongcai, deputy director of the Economics Policy Commission at the China Association of Policy Science.

“Right now economic growth drivers are still insufficient,” he said in a Mandarin-language phone interview, translated by CNBC. “Although this year it’s not hard to achieve the growth target of around 5%, there is great pressure on the economy next year.”
Earlier this month, the International Monetary Fund lowered its growth forecast for China to 5% this year and 4.2% next year.

The IMF cited “weaknesses” in China’s real estate sector and pressure on “debt repayments, home sales, and investment.”
China reported last week that third-quarter gross domestic product grew by 4.9%, beating expectations and bolstering forecasts for full-year growth of around 5% or more.
On Tuesday, Chinese authorities also announced the issuance of 1 trillion yuan ($137 billion) in government bonds for natural disaster relief, according to state media. Xinhua, the official state news agency, also pointed out the deficit would increase to 3.8% from 3%.
“It came to the market as a surprise,” Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, said in a note. “China rarely revise[s] its budget.”
“I take this policy as another step in the right direction – China should make its fiscal policy more supportive, given the deflationary pressure in the economy. Part of the funds raised will be utilized next year, hence this helps to boost growth outlook beyond Q4.” 

‘Extra policy support and more ammo’

Earlier on Tuesday, Bloomberg reported, citing sources, that Chinese President Xi Jinping made his first known visit to the People’s Bank of China since taking the top leadership role. CNBC was not able to independently confirm the report.
Futures for China stocks were up across the board, with that of Hong Kong-traded stocks up by about 2.5% or more as of Tuesday evening, according to Wind Information data.
Among major government personnel changes announced Tuesday, Chinese state media said Lan Fo’an would replace Liu Kun as Minister of Finance.
“The higher debt-to-GDP ratio and ad hoc issuance of additional debt from the central government could provide extra policy support and more ammo to re-engineer a stronger and faster recovery, offsetting macro headwinds and uncertainties,” said Bruce Pang, chief economist and head of research for Greater China at JLL. More

Barclays CEO C.S. Venkatakrishnan said the bank “continued to manage credit well, remained disciplined on costs and maintained a strong capital position” against a “mixed market backdrop.”
Analysts polled by Reuters had produced a consensus forecast of £1.18 billion, down from £1.33 billion in the second quarter and £1.51 billion for the same period in 2022.

A view of the Canary Wharf financial district of London.
Prisma by Dukas | Universal Images Group | Getty Images

LONDON — Barclays shares retreated on Tuesday as investors assessed the prospect of cost-cutting charges, pressure on domestic interest margins and weak performance in formerly strong divisions.
The bank reported a net profit of £1.27 billion ($1.56 billion) for the third quarter, slightly ahead of expectations as strong results in its consumer and credit card businesses compensated for weakening investment bank revenues.

Analysts polled by Reuters had produced a consensus forecast of £1.18 billion, down from £1.33 billion in the second quarter and £1.51 billion for the same period in 2022.
Here are other highlights for the quarter:

CET1 ratio, a measure of banks’ financial strength, stood at 14%, up from 13.8% in the previous quarter.
Return on tangible equity (RoTE) was 11%, with the bank targeting upwards of 10% for 2023.
Group total operating expenses were down 4% year-on-year to £3.9 billion as inflation, business growth and investments were offset by “efficiency savings and lower litigation and conduct charges.”

Barclays CEO C.S. Venkatakrishnan said the bank “continued to manage credit well, remained disciplined on costs and maintained a strong capital position” against a “mixed market backdrop.”
“We see further opportunities to enhance returns for shareholders through cost efficiencies and disciplined capital allocation across the Group.”
Barclays will set out its capital allocation priorities and revised financial targets in an investor update alongside its full-year earnings, he added.

Barclays’ corporate and investment bank (CIB) saw income decrease by 6% to £3.1 billion, with the bank citing reduced client activity in global markets and investment banking fees.
Revenue in the traditionally robust fixed income, currency and commodities trading division dropped 13% as market volatility moderated, dampening trading volumes.
This was mostly offset by a 9% revenue increase in its consumer, cards and payments (CC&P) business to £1.4 billion, reflecting higher balances on U.S. cards and a transfer of the wealth management and investments (WM&I) division from Barclays U.K.
The bank did not announce any new returns of capital to shareholders after July’s £750 million share buyback announcement.
Cost cutting charges ahead
Barclays hinted at substantial cost cutting that will be announced later in the year, mentioning in its earnings report that the group is “evaluating actions to reduce structural costs to help drive future returns, which may result in material additional charges in Q423.”
The cost-income ratio in the third quarter was 63%, but the bank has set a medium-term target of below 60%.
Notably, Barclays cut its net interest margin forecast for the U.K. bank to a range of 3.05% to 3.1%, down from previous guidance of around 3.15%.
The bank had warned in its second-quarter earnings that it expects to earn less interest in its U.K. division, with net interest margins in its domestic bank under pressure because of increased competition for savers’ deposits amid a difficult period for household finances in the U.K.
The bank’s shares slipped by as much as 6.5% by 09:16 a.m. in London, as market participants balked at the prospect of cost actions and margin pressure.
“Net interest margin is the metric the banks are judged on so it is not a surprise to see Barclays heavily punished for downgrading guidance here even if profit for the third quarter was ahead of guidance,” said Danni Hewson, head of financial analysis at stockbroker AJ Bell.
“It’s never a particularly palatable message for shareholders to hear a business is going to be less profitable. While the banks were seen as beneficiaries of higher interest rates, and perhaps were for a time, the competitive and regulatory pressures to match increases in the cost of borrowing with rates offered for cash on deposits mean this benefit has not proved long lasting.”
A ‘mixed set of results’
John Moore, senior investment manager at RBC Brewin Dolphin, said that, despite beating expectations at a headline level, Barclays had produced a “real mixed set of results” that reflected an “increasingly challenging backdrop.”
“Sentiment has generally soured, on the back of U.S. regional banks struggling with lower than expected net interest margins and issues such as the well-publicised problems of Metro Bank,” Moore said in an email Tuesday.
“Market conditions have also not been great for Barclays’ investment banking division, with deal activity relatively low. That said, its other banking operations are largely resilient – particularly its consumer and credit card business – and, with capital to invest, Barclays could be a beneficiary as some of its smaller peers struggle in the current environment.” More

3 in 4 of Gen Z would rather have a better quality of life than have extra money in their banks, a report by Intuit shows.
Athima Tongloom | Moment | Getty Images

For most people, their goal is to work hard, save money and retire early. But a “soft saving” trend is emerging among younger workers, challenging the traditional way of thinking.
Soft saving refers to putting less money into the future, and using more of it for the present.

Generation Z — a generation that puts experiences before money — is leading the so-called soft saving wave, according to the Prosperity Index Study by Intuit. “Soft saving is the soft life’s answer to finances,” said the report.
A “soft life” is a lifestyle that embraces comfort and low stress, prioritizing personal growth and mental wellness.

Younger generations value a balance between the traditional ‘hustle’ to save every single penny and using some of their extra income to enjoy life now.

Ryan Viktorin
Vice President, Financial Consultant at Fidelity Investments

The report found the approach to investing and personal finance by Gen Z’s — those born after 1997 — to be “softer” than previous decades.
What does that mean? It means younger investors tend to put their money in causes that reflect their personal views.
They also seek emotional connection with brands and professionals they choose to engage with, Liz Koehler, head of advisor engagement for BlackRock’s U.S. Wealth Advisory business told CNBC.

Are people saving less?

Younger workers have a desire to break free from restrictive financial constraints.
Three in four Gen Z would rather have a better quality of life than extra money in their banks, the Intuit report shows.
In fact, personal saving rates among Americans today seem to mirror the soft savings trend. 
According to the U.S. Bureau of Economic Analysis, Americans are saving less in 2023. The personal saving rate — the portion of disposable income one sets aside for savings — was significantly lower at 3.9% in August, compared to the 8.51% average in the past decade, according to data from Trading Economics which goes as far back as 1959.

One of the reasons for a drop in personal savings is the rebound from the Covid-19 pandemic, said Ryan Viktorin, vice president financial consultant at Fidelity Investments, a financial services corporation.
As Americans spent significantly lower during the pandemic in the last two to three years, people more are likely to spend a lot more now to make up for lost time, she told CNBC.
Additionally, inflation makes it harder for people to cover their expenses or save, Koehler said.
The decrease in personal saving rates also reflects a change in financial goals among workers today. 
As younger people enter the workforce, they bring in new financial priorities and are more likely to embrace a “balance between the traditional ‘hustle’ to save every single penny and using some of their extra income to enjoy life now,” Viktorin said.

Retiring and savings

Retirement is the grand finale for most workers. However, more are concerned they may not be able to retire at all. 
A report by Blackrock shows that in 2023, only 53% of workers believe they are on track to retire with the lifestyle they want. A lack of retirement income, worries over market volatility and high inflation were some of the reasons cited for a lack of confidence about retirement among workers.

Spending money on things that truly make you happy is great … [but] people should satisfy their near-term needs and stay on-track with their long-term goals before spending freely.

Andy Reed
Head of Investor Behavior at Vanguard

Younger workers also share the same sentiments, where two in three Gen Z are not sure if they will ever have enough money to retire. 
However, this fear may not be that much of a concern for the younger generation, as most are actually looking to retire early — or to retire at all, the report by Intuit showed.
Additionally, the Transamerican Center for Retirement Studies found that almost half the working population either expects to work past the age of 65, or do not have plans to retire.
Traditionally, retiring entails leaving the workforce permanently. However, experts found that the very definition of retirement is also changing between generations.

About 41% of Gen Z and 44% of millennials — those who are currently between 27 and 42 years old — are significantly more likely to want to do some form of paid work during retirement.
That’s higher than the 31% of Gen X (those born between 1965 to 1980) and 21% of Baby Boomers (born between 1946 to 1964) surveyed, the report by the Transamerican Center for Retirement Studies showed. 
This increasing preference for a lifelong income, could perhaps make the act of “retiring” obsolete. 
Although younger workers don’t intend to stop working, there is still an effort to beef up their retirement savings.
Fidelity’s second quarter retirement analysis found that millennials and Gen Z’s are still major beneficiaries of the 401(k) saving plan, a retirement savings plan offered by American employers that has tax advantages for the saver.
The report revealed that in the second quarter of last year, the average 401(k) balances were up by double digits for Gen Z and millennials — Gen Z saw a 66% increase and millennials had 24.5% increase.

What are people spending more on?

Still, one question remains: where are people directing their money as they spend more and save less?
The study by Intuit found that millennials and Gen Z are more willing to spend on hobbies and make non-essential purchases compared to Gen X and boomers.
About 47% of millennials and 40% of Gen Z expressed a need to have money to pursue their passion or hobby, compared to only 32% of Gen X and 20% of boomers. 

Experts highlighted travel and entertainment as some of the non-essential experiences the younger generation is prioritizing.
Andy Reed, head of investor behavior at investment management firm Vanguard, said Gen Z’s spending on entertainment increased to 4.4% in 2022, compared to 3.3% in 2019.
In addition, Americans are “re-focused” on post-pandemic travel, a possible reason why there is a decrease in personal saving rates, said Fidelity’s Viktorin.

Soft saving is the soft life’s answer to finances.

Intuit
Prosperity Index Study

Although the younger generation is saving less, it doesn’t mean they are living paycheck to paycheck. 
In fact, “Gen Z appear to be living within their means, and their increased spending seems to reflect rising costs of essentials more than a rising taste for luxury,” Reed noted. 
“Spending money on things that truly make you happy is great … [but] people should satisfy their near-term needs and stay on-track with their long-term goals before spending freely,” he added. More