BCS Barclays PLC

By Max Colchester 

LONDON-- Barclays PLC executives Wednesday vowed to continue shedding businesses as legacy operations and lower investment banking returns dragged down first quarter results.

The British bank said net profit in the first three months of the year fell 7% to GBP433 million ($631.4 million), compared with the same period last year, hit by higher operating expenses.

The bank's shares were broadly flat in London trading, despite the results beating analysts' expectations and the investment bank faring better than expected. "There is more we must do to improve returns, and we are focused on management actions to do so," Chief Executive Jes Staley said.

Barclays is the in the process of a multiyear reshaping. Since arriving late last year Mr. Staley has slashed its dividend, further pared back the lender's investment bank and is in the process of finding a buyer for a range of Barclays's businesses including a stake in its African unit.

On Wednesday the bank said it had entered into exclusive discussions to sell its French retail business to AnaCap Financial Partners. Barclays said that it was continuing to "explore opportunities" for the sale of its African business. A consortium led by former Barclays Chief Executive Bob Diamond has said it is raising funds to make a bid for the business. The sales of Barclays Portuguese and Italian retail, and Asian wealth businesses should all complete during the year. Mr. Staley said he was "determined to keep up the pace," of disposals.

The bank's efforts to shed unwanted assets continued to rack up losses. The bank's "noncore" division reported losses before tax of GBP815 million in the first quarter. Cutting the assets on the balance sheet allows the bank can free up capital for other uses.

Like its U.S. peers Barclays's investment bank has been hit as trading volumes fell in the first part of the year amid volatile markets. Underlying profit before tax at the corporate and investment bank was down 31% to GBP701 million in the first quarter, hit by a slump in bond trading. The bank had already warned investors that results would be disappointing at the trading division. However, the unit fared better than U.S. peers helped by a strong performance of its advisory business, according to Bernstein Research. Barclays said that revenues in second quarter are running below those in the first quarter.

"The performance of our corporate and investment bank was relatively resilient in a tough quarter," Mr. Staley said in a statement. Mr. Staley has said he intends to keep the investment bank roughly in its current shape, sparing the unit from more drastic downsizing.

Analysts at Jeffries said the results were "uncontroversial." Overall revenue fell 11% to GBP5.04 billion. Impairment charges increased 15% to GBP443 million in the quarter hit by struggling clients in the oil and gas sector.

The result at the investment bank was offset by stronger returns at Barclays's credit-card business. The bank's U.K. retail unit suffered a difficult quarter with profit before tax slumping 17%, hit by low interest rates and increase competition in mortgage markets.

Write to Max Colchester at max.colchester@wsj.com

(END) Dow Jones Newswires

April 27, 2016 07:10 ET (11:10 GMT)

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