LONDON (Reuters) - Barclays said its first-quarter profit fell after a "significant" drop in revenue from its investment bank's fixed- income operations, extending an industry slump across that business.
A cost-cutting programme was starting to show a "material benefit", however, and would help offset the drop in investment bank profits, Barclays said on Thursday.
Barclays said it will report a "small reduction" in adjusted pretax profit compared with a year ago when it publishes first-quarter results on May 6.
Most investment banks are expected to show income fell at the start of the year as bond and interest-rate trading struggled.
"Our fixed income, credit and commodities (FICC) business continued to face many of the challenges seen in the second half of 2013 with a significant year-on-year reduction in FICC income, reflecting difficult market conditions and a strong comparative performance for Q1 last year," Barclays Chief Executive Antony Jenkins said in a statement.
Tougher regulations have made many areas of investment banking less profitable and many bankers and analysts say the drop in FICC revenues is permanent and banks need to take more aggressive action to shrink their businesses.
United States rival JPMorgan reported its FICC revenues fell 21 per cent in the first quarter from a year ago, while Goldman Sachs reported an 11 per cent drop and Citigroup posted an 18 per cent fall.
Jenkins is reviewing the size and shape of Barclays'investment bank and will unveil details of his plan on May 8. He is expected to axe thousands of jobs to cut costs and improve returns.
The bank could cut as many as 7,500 staff, mainly by shrinking its European fixed-income business, Bernstein analyst Chirantan Barua estimated this week.
Barclays said its equities and investment banking advisory businesses in the first quarter performed broadly in line with a year ago.
Barclays released the update before the start of its annual shareholder meeting in London, where a significant minority of investors are expected to vote against its executive pay, in protest after the bank increased bonuses for investment bankers last year despite a one-third drop in profit.