Barclays has reported a doubling of underlying quarterly profits, excluding a big hit for selling its African unit, as its chief executive sought to shift attention away from a row over his treatment of a whistleblower.
Jes Staley, who is being investigated by British and American regulators for trying to discover the identity of a whistleblower, said: “We are now just two months away from completing the restructuring of Barclays as a transatlantic consumer, corporate and investment bank and there is further good reason in this quarter’s performance to feel optimistic for our prospects.”
The bank reported attributable profits of £190m for the three months to March, down from £433m in the same period of last year. But this included the £658m post-tax goodwill writedown on the value of its African business.
Profits after tax from continuing operations more than doubled to £1.2bn – outstripping analyst expectations. Revenues rose 16 per cent to £5.8bn, while operating costs shrank 5 per cent to £3.6bn.
Barclays shares were trading down 3.6 per cent at 217.8 pence after the results on Friday morning.
The underlying results are an indication that Mr Staley’s decision to double down on Barclays’ investment bank while selling its large African operation and slashing its dividend in half may be starting to pay off.
Profits were flat at the bank’s UK division, while they rose by a third at its international arm, which includes its investment bank. The biggest improvement, however, was in its non-core division, which it plans to wind down by June and where losses fell 70 per cent to £241m.
The corporate and investment bank had a mixed performance. While revenues rose 18 per cent from “banking” activities, such as debt and equity underwriting and advisory, it suffered double-digit declines in fixed income and equities trading – missing out on the big increase in markets revenues enjoyed by US rivals.
Chirantan Barua, analyst at Bernstein, said: “Sequentially, fixed income and currencies was weaker than peers with strong credit performance offset by weak rates and foreign exchange [trading income].”
Barclays said the goodwill impairment on its 50 per cent stake in Barclays Africa Group Limited largely reflected the 17 per cent fall in the value of its Johannesburg-listed offshoot. South African markets were hit by last month’s abrupt firing of Pravin Gordhan, the country’s respected finance minister.
The bank blamed a 19 per cent rise in loan impairment charges on “a change in portfolio mix in US cards and business growth”.
Its common equity tier one ratio, a key benchmark of financial strength, inched up to 12.5 per cent during the quarter, within its target range, despite the cost of redeeming $1.4bn of US preference shares.
Barclays said the UK Serious Fraud Office “has stated that it intends to make a decision shortly” on its investigation into the bank’s emergency fundraising from Qatari and Abu Dhabi investors in 2008.
The improved results bring some relief to Mr Staley, who has been heavily criticised for last year ordering the bank’s security team to try to identify a whistleblower who had made allegations about a recently-recruited senior employee. The CEO had previously been told by compliance staff that this was not appropriate.
Some investors have told the Financial Times they are sceptical Mr Staley can survive the scrutiny he faces from regulators, which have the power to ban him from working in finance for breaking the whistleblowing rules.
The Barclays boss has already been formerly reprimanded by his board, which also promised to dock his bonus by an amount that is to be determined once regulators release their findings.