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Barclays profits fall as bank warns of weak October

Barclays, the U.K. bank, has reported slightly worse than expected profits for the third quarter, and warned of a weaker end to 2015 as it cut some targets.

The bank reported an adjusted pretax profit of £1.43 billion ($2.18 billion) for the third quarter, lower than the average forecast of £1.65 billion by analysts. Its share price fell by 3 percent at the London market open after the announcement.


The investment banking part of the business has seen weaker market conditions in October this year compared to 2014 - part of generally weaker market conditions. Barclays also warned of the impact of the U.K.'s controversial bank levy in the last quarter of the year. Investment banking profit before tax was up 31 percent from the same time in 2014, but down by more than half from the previous quarter, in line with other investment banks which have been hit by market turbulence over the summer.

Barclays revised down its targets for return on equity in 2016 from over 12 percent to 11 percent, and also increased its core cost guidance for 2016 core cost guidance from less than £14.5 billion to closer to £15 billion. Much of this is because of the cost of shielding its retail banking operations from the riskier investment banking side.

The bank restated its plans to have a common equity tier 1 (CET 1) ratio, a core measure of financial strength, of more than 11 percent by the end of next year, despite a slightly disappointing figure of 11.1 percent for the third quarter.

The results followed the confirmation on Wednesday that Jes Staley has been appointed as Barclays new chief executive, after months where the bank has been led by executive chairman John McFarlane. The former JPMorgan banker's appointment is likely to be seenas a re-focus on the bank's investment banking operations after they had been pared down under the previous incumbent, Antony Jenkins.

His appointment should help the bank in the U.S., which Chirantan Barua, senior analyst at Bernstein, pointed out in a research note "is where the IB makes all its money and has been underperforming peers" and also where the bank needs help to rebuild its relationship with lawmakers, after high-profile scandals like the Libor manipulation case.

- By CNBC's Catherine Boyle