$2bn US settlement and high PPI payouts put Barclays in red
Barclays swung to a loss in the first quarter as further payment protection insurance (PPI) charges and a £1.4bn settlement with the US Department of Justice knocked profits.
The UK bank reported a pre-tax loss of £236m for the three months to March 31, having reported profits of £1.68bn in the same period last year.
Stripped of litigation and conduct charges, pre-tax profits rose 1% to £1.7bn, while attributable profit came in at £1.2bn.
The bank was hit by a $2bn (£1.4bn) settlement reached with the US Department of Justice earlier this month, which was related to the sale of mortgage-backed securities in the lead-up to the financial crisis.
Chief executive Jes Staley said: "While the penalty was substantial, this settlement represents a major milestone for Barclays, putting behind us a significant, decade-old legacy matter."
Barclays booked an extra £400m to cover PPI charges after seeing a higher number of complaints over the quarter. While the charges affected Barclays' CET1 levels - referring to the capital cushion that underpins a bank's loans - Mr Staley said he was confident in the lender's position.
"This has been a significant quarter for Barclays, one in which we have shown that our new operating model and our portfolio of diversified, profitable businesses are capable of producing improved returns for shareholders."
Laith Khalaf, a senior analyst at Hargreaves Lansdown, said: "There's a lot not to like about Barclays' latest results, although many of the factors hampering the bank are one-off items which don't speak for the future prospects of the business."
He added: "Stripping out these setbacks, performance has been a disappointment rather than a disaster, which the headline figures by themselves might suggest."
The PPI charges dragged on returns from its UK business, which suffered a 17% fall in pre-tax profits to £581m, while its international business saw pre-tax profits rise 4% to £1.4bn.
The bank's total income for the first quarter fell 8% to £5.3bn from £5.8bn last year.
Barclays said currency movements were partly to blame, given the US dollar's depreciation against the stronger pound.
The bank recently launched its ring-fenced bank, saying that together with its restructuring last year, it was now "well-positioned to deliver strong earnings going forward and remains confident of achieving its returns and cost targets".