Barclays profit falls as its empire shrinks

BARCLAYS profits plunged by more than a quarter in the first three months of 2016 as the bank pledged to sell lossmaking parts of its empire.

It posted a profit of £793m, down from £1.1bn a year earlier – the first results under the leadership of cost-cutting chief executive Jes Staley.

The new boss has presided over at least 8,000 job cuts since taking charge in December and is seeking to sell the bank’s 74 French branches to AnaCap Financial Partners.

Barclays’ African operations are also up for sale, with disgraced former chief executive Bob Diamond among those seeking to buy them.

Staley said there had been ‘interest expressed by a number of parties’ but would not comment on Diamond, who quit after the lender was fined £290m for rigging Libor interest rates in 2012.

The quarterly retreat was led by Barclays’ corporate and investment banking arm, where underlying profits fell 31pc to £701m as turmoil gripped markets.

Its foreign consumer division doubled profits to £326m off the back of a surge in US demand for credit cards.

And British profits held up reasonably well, down 2pc to £704m. Overall, the bank’s key businesses brought in £1.6bn of profit, up 18pc on the previous year.

However, the losses in the bank’s ‘non-core’ section – a bundle of bad loans and underperforming ventures it is seeking to get rid of – jumped from £310m to £815m.

Hargreaves Lansdown analyst Laith Khalaf said: ‘Investors were braced for some pain from the investment bank, and this duly materialised. It is taking a long time to sort Barclays out, and this is trying the patience of investors.

‘When it’s all over, Barclays should have two high- quality financial services divisions.’

Khalaf warned the bank had to ‘get its house in order’ before the next downturn made global conditions worse.

But, in a sign of progress, the quarter was the first time in five years Barclays did not have to pay any charges for bad behaviour. It does not mean the bank has finally struggled free of its toxic legacy – multi-billion-pound American fines are still expected over its selling of bad mortgage debt – but commentators still welcomed the news.

Ian Gordon of Investec said that the figures were ‘uncharacteristi- cally clean’ and a sign that Barclays could finally be ‘on the road to redemption’.

Staley said there was a profitable bank inside Barclays which could eventually offer investors doubledigit returns.

‘The biggest challenge we face is winding down non-core,’ he said.

‘That’s a very significant restructuring of a large financial institution. The encouraging thing, over the past five months, is the level of progress we’ve made.’

Barclays last month announced a 50pc dividend cut for the next two years as it pushed its way back to growth.

Shares yesterday closed up 0.5pc, or 0.85p, at 174.8p.

Santander’s UK profits have jumped 13pc as landlords rush to buy property ahead of a Government shake-up.

The bank picked up an extra 131,000 customers in the first three months of the year and handed out £7.1bn of mortgages.

Revenue for the period stayed steady at £1.2bn but profits rose to £532m from £470m in the first three months of 2015.

Santander put some of the growth down to a stamp duty change introduced on April 1.

It means anyone buying a second residential property now has to pay more tax. The bank said: ‘The surge in completions in March may have skewed figures and meant that the first quarter has been top-loaded with lending that would have otherwise taken place throughout the year.’

Its Spanish parent, Banco Santander, the biggest bank in the eurozone, saw profits plunge by 5pc to £1.3bn, mostly due to currency volatility.