Barclays profit more than doubles amid stock trading boom

Barclays reported a profit before tax for the three months ended March 31 of $4.4 billion.
Barclays reported a profit before tax for the three months ended March 31 of $4.4 billion.PHOTO: REUTERS

LONDON (REUTERS) - Barclays' profits more than doubled in the first quarter, as the group's investment bank capitalised on a share trading mania while charges against expected bad loans shrank to almost nothing.

Barclays on Friday (April 30) reported a profit before tax for the three months ended March 31 of £2.4 billion (S$4.4 billion), up from £923 million a year ago and above the £1.76 billion average of analysts' forecasts.

The lender took an impairment charge of just £55 million for further bad loans, much less than analysts had forecast and down from £2.1 billion in the same period a year ago.

The stronger-than-expected results followed similarly upbeat news from rivals such as HSBC and Lloyds earlier in the week, as British banks benefited from government job support schemes that have put back the hit from the pandemic.

The British banks, however, have been more cautious than US peers such as JPMorgan, which earlier this month released more than US$5 billion (S$6.6 billion) it had set aside to cover bad loans.

Barclays' strong results came despite a mixed performance from its investment bank, where the usually standout fixed income, currencies and commodities (Ficc) business reported a 35 per cent decline in income.

The poor performance in Ficc, which Barclays said was due to a slump in client demand compared to the frenzied start of 2020, was offset by a 65 per cent spike in equities trading income, mainly due to derivatives.

The stocks boom also bolstered its banking advisory business within the investment bank, as income rose 35 per cent to £859 million  from fees for advising on equity fundraisings.

The results mirrored those of French rival BNP Paribas, which on Friday also reported a rebound in equity trading and a drop in fixed income.

The generally strong performance in the past few years from Barclays' investment bank has vindicated CEO Jess Staley's backing of the business, during a period when activist shareholder Ed Bramson urged him to cut it back.