BCS Barclays PLC

Earnings decline 7% on weak performance at investment bank and higher costs

By Max Colchester 

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

The British bank said Wednesday that net profit in the first three months of the year fell 7%, to GBP433 million ($631.4 million), from a year earlier, hurt by higher operating expenses. Revenue fell 11%, to GBP5.04 billion. Impairment charges increased 15%, to GBP443 million, hit by struggling clients in the oil and gas sector.

The bank's shares edged up 0.5% in London trading as the results beat analysts' expectations and the investment bank fared better than expected.

"There is more we must do to improve returns, and we are focused on management actions to do so," Chief Executive Officer Jes Staley said.

Barclays is in the process of a multiyear reshaping. Since arriving late last year, Mr. Staley has cut its dividend, further pared 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.

The bank said Wednesday that it had entered into exclusive discussions to sell its French retail business to AnaCap Financial Partners. Barclays said it was continuing to explore opportunities for the sale of its African business. A consortium led by former Barclays CEO 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 be completed this 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 assets on the balance sheet allows the bank to 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 revenue in the second quarter is running below that in the first quarter.

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

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 increased competition in mortgage markets.

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

(END) Dow Jones Newswires

April 28, 2016 02:47 ET (06:47 GMT)

Barclays (NYSE:BCS)
Historical Stock Chart
From Mar 2024 to Apr 2024

Barclays (NYSE:BCS)
Historical Stock Chart
From Apr 2023 to Apr 2024