×

Barclays focuses on the core as pretax profits drop 25%

Barclays' group pretax profit dropped 25 percent to £793 million ($1.15 billion) in the first quarter, from the same period last year, but highlighted that it was making "good progress" in concentrating on its core business, where the pretax figure was up 18 percent at £1.6 billion.

Underling profit before tax within the Barclays U.K. unit decreased 2 percent to £704 million and Barclays' Corporate and International division, the bank said in its earnings statement, saw a 2 percent increase in income driven by growth in Consumer, Cards and Payments "and a resilient income performance in the Corporate and Investment Bank (CIB) despite challenging market conditions."

However, underlying profit before tax decreased 31 percent in that division during the first quarter, driven by a reduction in banking and markets income, increased credit impairment charges and higher operating expenses.

The bank added it was continuing to target cost reductions in the group and that it was "on track" to meet its 2016 guidance for the core business of £12.8 billion, and our longer-term target of a Group cost to income ratio under 60 percent.

Shares of the bank rose 4 percent in early trade on Wednesday.

The financial district in London.
Getty Images
The financial district in London.

In March, Barclays announced further restructuring, a dividend cut and an 8 percent fall in statutory pretax profit last year to £2.1 billion ($3.05 billion) and a 3 percent rise in core pretax profit in 2015 to £6.9 billion.

As part of its full-year results, Barclays announced last month that it would be simplifying its business structure to two sibling divisions: Barclays U.K. – which will become a U.K. ring-fenced bank – and Barclays Corporate and International.

As part of the overhaul, Barclays said it was looking to sell down its 62.3 percent holding in its African business. It also announced it was cutting the dividend to 3 pence a share in 2016.

On Wednesday, the bank said that momentum in the rundown of non-core continued, with risk weighted assets (RWAs) decreasing a further £3 billion to £51 billion in the quarter.

It added that the previously announced sales of the Portuguese and Italian retail, and Asian wealth businesses were all targeted to complete during the year, and were expected to result in a further £3.4 billion reduction in RWAs.

In the bank's latest earnings statement on Wednesday, Chief Executive Jes Staley said the first-quarter results showed "good progress."

"This quarter we have made good early progress against the strategy update we announced on the 1st of March. It is the first set of results as a transatlantic consumer, corporate and investment bank operating under our new configuration of Barclays UK and Barclays Corporate & International, and they show a Core business performing well in a challenging environment."