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Barclays profit up, investment bank pain continues

Barclays profit up, investment bank pain continues
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First Published: Mon, Oct 31 2011. 06 07 PM IST

Simon Dawson/Bloomberg
Simon Dawson/Bloomberg
London: Barclays Plc’s underlying quarterly profit rose 5% from a year ago as lower charges for bad debt at the British bank offset a third consecutive sharp fall in investment banking revenue.
Barclays said on Monday capital markets had remained difficult in October as the euro zone’s financial problems deepened, but had shown some improvement since last week’s announcement of plans to solve the crisis.
Pretax profit in the third quarter through September reached 2.4 billion pounds ($3.9 billion). Stripping out a gain on the value of its own debt and other one-off items, profit was £1.34 billion, up 5% on the 2010 period.
Simon Dawson/Bloomberg
Analysts said a slackening in its investment bank had been taken up by improvement in other areas, notably UK retail banking and the BarclayCard credit card arm.
“It does look as if all their businesses are making a contribution, which is always a decent sign,” said Cavendish Asset Management fund manager Paul Mumford, whose firm owns around 1 million Barclays shares.
Top-line income at Barclays Capital, the investment bank that provides the bulk of the bank’s profit, fell to £2.25 billion, down 22% from the second quarter to be in line with the consensus forecast as capital markets activity was hit hard across the industry.
Revenue in fixed income, currencies and commodities (FICC) dropped 16% from the second quarter, equities income slumped 40% and advisory income was down by a quarter.
Barclays’ investment in US money manager BlackRock was marked down by £1.8 billion, which it said had already been recognised in equity and regulatory capital.
Barclays said its underlying profit for the first nine months of this year was a shade over £5 billion, up 18% from a year earlier.
Chief executive Bob Diamond said this showed momentum “despite significant economic and market headwinds” and said the bank had “rock solid” capital, funding and liquidity. It does not intend to raise new equity capital, he said.
Losses on bad debts were £1 billion in the third quarter, down 16% from a year ago, and have tumbled by a third so far this year.
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First Published: Mon, Oct 31 2011. 06 07 PM IST