Barclays reports net profit of $1.8 billion in Q1

PLC postponed a share repurchase until it resolved a debt-sale blunder with regulators, a blunder that resulted in a drop in net profit last quarter.

The London-based lender announced on Thursday that it earned £1.4 billion, or $1.8 billion, in the three months ending in March, down from £1.7 billion the previous year. According to FactSet, analysts projected the bank to make a £1.55 billion profit for the quarter. The bank’s estimations put the total at £1.32 billion. The company’s revenue climbed by 10% to £6.5 billion.

The stock increased by 2.7 percent. Barclays has plummeted 22 percent this year, compared to a 1.5 percent growth in the UK’s benchmark FTSE 100 stock index, and is trading around a one-year low.

Early in his term, Barclays Chief Executive C.S. Venkatakrishnan found himself in a bind after the bank said last month that it was facing a £450 million loss, net of tax, and a regulatory inquiry. For approximately a year, its U.S. division mistakenly sold more structured notes than the Securities and Exchange Commission authorised due to a clerical error. It stated that it plans to repurchase the notes at a loss. Previously, Mr. Venkatakrishnan served as the bank’s top risk officer.

“This situation was entirely avoidable and I’m deeply disappointed that it occurred,” said Mr. Venkatakrishnan on Thursday. “To date, we have not found any evidence of intentional misconduct. The fact that this overissuance occurred reflects a weakness in our control environment.”

According to Barclays, the projected loss is now around £500 million, and the bank has set aside £540 million to cover the loss. Because of the litigation and conduct charges, the bank’s operating expenditures increased by 14%.

“This is not a question of whether we will be proceeding with this buyback but when,” Mr. Venkatakrishnan said. “We expect to be in a position to do so toward the end of the second quarter.”

Overall, Barclays’ results mirror those of major U.S. banks, which saw significant profit declines in the first quarter. Morgan Stanley’s and Citigroup’s net earnings dropped 11% and 46%, respectively.

The crisis in Ukraine has sparked turmoil in markets and a drop in deal making, resulting in the greatest inflation in decades and surging commodities prices. The United Kingdom is experiencing a particularly severe cost-of-living crisis, with British households projected to have their real earnings decline by the most in 30 years.

Throughout the first quarter, profit at Barclays’ corporate and investment bank increased by 4% to £1.3 billion, owing to a drop in investment banking fees but an increase in activity in global markets as the bank supported its clients during the period of market turbulence. The bank’s U.K. unit’s profit increased by a third to £396 million.

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