Investors in Barclays braced for poor figures
BARCLAYS will reveal the impact of a dire start to the year in the investment banking sector today as it kicks off earnings from the major high street lenders.
Bosses at the bank will also face shareholders at the group’s annual general meeting tomorrow amid criticism over new chief executive Jes Staley’s pay deal.
First-quarter figures from the group follow a dismal clutch of earnings on Wall Street after the new year stock market turmoil caused a collapse in trading and fee income.
US giant Goldman Sachs most recently laid bare the extend of the sector’s woes, revealing its first quarter profits had more than halved, down 56%, while net revenues slumped 40% to £4.3bn.
Chairman and chief executive of Goldman Sachs Lloyd Blankfein said the first quarter had seen “headwinds across virtually every one of our businesses”.
An update from Morgan Stanley the day before was equally grim, showing profits had more than halved, while results from JP Morgan, Citigroup and Bank of America Merrill Lynch have also revealed a hefty investment banking hit.
The Barclays results are expected to follow suit, although the group’s retail arm will help offset some of the gloom.
The group’s investment bank turned in a £146m loss in the fourth quarter of 2015, which contributed to an 8% fall in annual pre-tax profits to £2.1bn.
It has already warned over first quarter trading, saying alongside its annual results in March that figures are set be weaker than last year in the face of turbulent market conditions and a “particularly strong March in 2015”.
Analysts are forecasting the group to post first quarter underlying pre-tax profits of £846m and attributable profits of £471m.
But comparisons will be hard to make with last year, given that it will report figures for the ringfenced businesses separately to the retail division for the first time.
Mr Staley, who replaced Antony Jenkins at the helm in December, announced a group-wide shakeup in March to split the bank into two divisions – Barclays UK and Barclays Corporate and International – and offload most of its stake in its Africa business.
The group’s new boss is likely to face a rough ride at the AGM on Thursday which comes after shareholders saw the stock slump by a third in the last six months.
His pay will also be in sharp focus after shareholder advisory groups hit out at the size of his salary.
He is paid £1.2m in annual salary and £1.15m in role-based pay, with annual bonuses worth a potential 80% of salary and longterm share awards worth a possible £1.44m.