Bank Earnings Lift Financials as Barclays Cuts 5,000 Jobs

Bank earnings lifted financial shares on Oct. 22 after strong Q3 earnings from Blackstone and Nasdaq, even as Barclays warned it will cut 5,000 jobs and lean harder on artificial intelligence. Bank earnings season has so far rewarded firms with strong trading desks and punished weakness in fixed income.

Blackstone's distributable earnings beat targets, though private-equity realisations fell 49%. Nasdaq's earnings topped expectations. The results helped bank earnings sentiment across the sector, with investors bidding up shares of lenders and asset managers alike.

Bank earnings: Barclays warns of 5,000 job cuts

The bank earnings story of the day belonged to Barclays. The London-based bank said it is cutting 5,000 jobs, about 5% of its workforce, this year as it uses technology such as AI to reduce fixed costs and improve returns. Around 60% of the cuts will hit support functions, including developers, chief financial officer Anna Cross told reporters. About 1,000 roles have already gone, with the rest to be cut by the end of the year.

The Barclays job cuts came alongside Q3 earnings that missed several key estimates. Barclays reported pre-tax profit of 2.3 billion pounds ($3.08 billion), up 12% from a year ago but below forecasts. Its bond traders had the biggest slump on Wall Street during the quarter: revenue from fixed income and currency trading fell 19% to 1.01 billion pounds ($1.4 billion), behind analyst expectations compiled by Bloomberg.

The equities desk was the bright spot. Equities revenue jumped 47% to 1 billion pounds, almost matching the fixed income haul and marking the desk's best performance since at least 2009, the year after Barclays bought the North American business of Lehman Brothers. The bank also announced a 500 million pound share buyback. "I am disappointed, and you can be sure this will get my attention," chief executive C.S. Venkatakrishnan said of the fixed income result, blaming a volatile quarter and weak trading in rates and credit.

"We will employ AI at scale," Venkatakrishnan said on the earnings call. "But AI is the icing on the cake, not the cake." Will Howlett, a financials analyst at Quilter Cheviot, said the Barclays job cuts show how significantly AI and automation could reshape banking in the coming years. Companies worldwide, including Microsoft and HSBC, have announced AI layoffs this year as automation increasingly affects employment. Barclays shares slipped 0.1%, outperforming other lenders, though the stock is down 12% so far this year.

Bank earnings and the AI workforce question

For bank earnings watchers, Barclays offered one of the clearest signs yet from a major lender of how AI is enabling headcount reductions in roles like software development. The bank said it had taken a further 201 million pounds in structural cost actions in the third quarter, part of its longer-term plan to reduce expenses like staff costs through greater use of technology. The question for the sector is whether the savings prove durable or simply defer operational risk. The Barclays announcement adds to a growing list of AI layoffs across tech and finance.

The broader bank earnings picture remains mixed. Strong results from trading-heavy firms have lifted the sector, but fixed income desks are struggling with lower client activity in rates and credit. Investors will get more results in the coming weeks to judge whether the Q3 earnings split was an exception or a pattern.