Investing slump at Barclays sparks fall in profits
Barclays has posted a 5% fall in profits for the first three months of the year as earnings from its investment bank slumped by half.
Adjusted pre-tax profits fell to £1.69bn after the bank warned last month that it would be hit by the performance of the division.
The investment bank, which faces a shake-up likely to cost hundreds of jobs when Barclays announces a strategy review on tomorrow, saw pre-tax profits fall by 49% to £668m.
It was driven by a "significant decline" of 41% in income from its fixed income, credit and commodities business as well as changes to the business.
Barclays chairman Sir David Walker has hinted at a shrinking of the investment banking arm following a controversial rise in its bonus pool last year despite declining profits at the group.
It has been reported the group is to create a 'bad bank' or non-core unit as it seeks to exit parts of its fixed-income business and loss-making European network.
Chief executive Antony Jenkins said the first quarter saw a strong performance from its retail, cards and business banking arms, while cost reductions drove down underlying operating expenses.
He said this week's review "will address issues underlying the performance challenges we have recently experienced, including positioning the investment bank for the new operating and regulatory environment".
The group said it remained "cautious about the trading environment", adding: "We remain focused on structurally reducing the cost base in order to improve returns."
There were no new provisions for compensating customers who were mis-sold payment protection insurance (PPI) – a scandal that has hit businesses across the sector in recent years.
Barclays said its pot of money set aside for redress stood at £689m after it used up £282m over the quarter.
It added that while overall complaint volumes fell though March, there was a spike in those claims made via management firms. The group said that as a result there was "significant uncertainty" about future levels of complaints.