Barclays profit plunges 12% in Q1
LONDON: Barclays reported a 12 per cent fall in first quarter profit, as a squeeze on UK mortgage pricing, lower income from trading and a drought of M&A fees showed the difficulties it will face in delivering its first strategic revamp in a decade.
The British bank reported pretax profit for the January-march period of 2.3 billion pounds ($2.84 billion), down from 2.6 billion pounds a year ago and narrowly above analysts’ forecasts for 2.2 billion.
Barclays is bidding to restore investor faith in its universal banking business model, after years of share price underperformance, clashes with activists over the role of its investment bank, and management turnover.
Its shares were trading 2.8% up at 0806 GMT compared with a 0.6 per cent rise in the FTSE 100 index.
The British bank said in a long-awaited strategy review on Feb. 20 it would invest in its high-returning domestic banking business, as well as axing 2 billion pounds of costs and ramping up payouts to shareholders.
The results update was the first under the lender’s new structure, reorganised into five operating divisions instead of three in an attempt to provide clearer disclosure on performance and management accountability. The lender now reports results for Barclays UK, Barclays UK Corporate Bank, Private Bank and Wealth Management, Investment Bank, and US Consumer Bank.
All five business divisions reported lower returns on tangible equity (ROTE) than their first-quarter 2023 comparisons, with the UK Corporate Bank the laggard of the set, posting ROTE of 15.2 per cent from 21.7 per cent a year ago.
Income in the UK bank division, which specialises in consumer and home loans, also fell 7 per cent, amid increased competition in the mortgage market and as savers moved money to higher-returning products.