Barclays profits down as investment banking drags performance

Barclays’ first-quarter profits stumbled as weak investment banking weighed on performance.

Barclays (LSE: BARC) reported a pretax profit of £2.28 billion for the January-March period, down from £2.60 billion a year earlier. However, the results exceeded market consensus by around 4%, pushing Barclays shares 4.2% higher on Thursday morning.

Total income fell to £6.95 billion versus £7.24 billion a year ago. Net interest income slipped 4% to £3.07 billion as the net interest margin contracted to 3.09% from 3.18%.

Barclays’ investment banking unit saw income drop 7% to £3.33 billion as strong equities was offset by lower fixed income trading. Advisory and transaction banking fees also declined.

In other units, UK retail bank income was down 7% at £1.83 billion while the US consumer bank rose 4% to £859 million. The private bank grew 20% to £312 million after absorbing the wealth management business.

Operating costs fell 3% to £4.00 billion. With litigation costs, total expenses rose 2% to £4.18 billion for a cost-to-income ratio of 60%.

Credit impairment charges held steady at £0.5 billion as total deposits grew £13.5 billion. The CET1 ratio edged down to 13.5%.

Barclays reiterated targets for over 10% return on tangible equity in 2024 and more than 12% by 2026, with £1 billion in targeted cost savings this year.

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