Barclays posts lower profits after US trading blunder

Banking giant Barclays has posted a fall in quarterly profits as it flagged cost-of-living pressures on customers and took a hit from a US trading blunder.

The lender posted pre-tax profits of £2.2 billion for the first three months of 2022, down from £2.4 billion a year ago – far better than expected, but still showing the impact of a £523 million charge from the debacle in its structured products division.

The error – which saw it sell more structured notes than it was allowed to under US rules – is being scrutinised by regulators and is likely to land Barclays with a fine, while it has also seen the bank push back a £1 billion capital return to shareholders.

It has made for a bumpy start to new boss CS Venkatakrishnan’s tenure after Jes Staley’s shock exit last November amid a probe into his relationship with convicted sex offender Jeffrey Epstein.

Barclays’s first quarter results show the group also booked a charge of £141 million for borrower arrears, more than double the £55 million a year ago as the cost-of-living crisis begins to hit customers.

But the group said it was not seeing signs that borrowers are getting into repayment troubles and expects arrears to remain lower than before the pandemic thanks to lower levels of more risky unsecured lending.

Costs in the quarter jumped to £4.1 billion from £3.6 billion a year ago as it put by around £500 million following regulatory probes, most recently having admitted to selling more products to investors in the US than it was allowed to.

However, results were buoyed by an impressive performance in its investment bank, with overall revenues rising 10% to £6.5 billion in the quarter as trading income was boosted by market volatility amid the Ukraine war.

Mr Venkatakrishnan, known as Venkat, said: “We remain focused on the impact higher prices are having on our customers and our small business and corporate clients, all of whom are facing far harder conditions this year as a result of inflation, supply chain issues and higher energy costs.

“We will support them through this difficult period wherever we can, and support the wider economy just as we did through the Covid-19 pandemic.”

Unveiling the results, he faced questions over a messy start to his time in charge at the bank, with Barclays also having to compensate customers for a Maltese timeshare misselling scandal.

But he signalled aims to put the woes behind him, as he stressed the bank remained committed to restarting the £1 billion share buyback once the US investigation is resolved, with the plan likely to get back on track towards the end of the second quarter.

He insisted: “I have always throughout my career at Barclays and otherwise been very strongly of the view that risk control is extremely important as well as a harmonious relationship with our regulators.”

Barclays also nudged up its outlook for the UK economy this year and next thanks to improved unemployment expectations, in spite of rocketing inflation.

But it cautioned: “The ongoing geopolitical situation could put further pressure on already high levels of inflation which may weigh on corporate profitability and consumer affordability levels.

“In addition, Covid-19 infection rates have started to increase across the globe which could result in (among other things) labour shortages and supply chain constraints.”