Barclays reported its first quarter profit more than doubled on Friday, but its investment bank missed out on a bond trading boom that saw earnings surge at its Wall Street rivals and its shares fell in initial trading.
Barclays said its profit before tax was 1.7 billion pounds ($2.19 billion), up from 793 million pounds a year ago and better than the 1.46 billion pounds average estimate of analysts' forecasts compiled by the bank.
The British bank is seeking to press ahead with restructuring plans which have seen it shift towards a transatlantic U.S.-UK focus and an emphasis on investment banking under Chief Executive Jes Staley.
In its trading business, income from its markets business decreased 4 percent to 1.35 billion pounds, as macro income fell 14 percent due to a weaker performance by its U.S. rates business and the impact of exiting energy-related commodities. Equities trading income also fell 10 percent, driven by lower revenue from U.S. equity derivatives.
Barclays' Wall Street rivals saw bond trading revenues rise by an average of 21 percent in the first quarter, with investors adjusting their portfolios in response to rising interest rates, and elections in Europe.
Deutsche Bank reported on Thursday that its markets business also lagged its U.S. peers last quarter.
Analysts were lukewarm about the results overall.
"The primary culprit was US rates revenue in the i-bank and a cost miss (could be partially FX driven). We do not see estimates rising on the back of today's results. Remain "Hold" on the shares," Jefferies analysts said in a note.
Barclays shares traded 3.5 percent lower at 0710 GMT.
However, Barclays overall performance was buoyed by a strong performance in its credit cards business and investment banking division, which advises on M&A transactions and equity and debt underwriting.
REGULATORY ISSUES
The bank also reported rising income of 708 million pounds, up from 651 million a year ago at its UK business. It said it would create 1,000 new roles in the UK in operations and technology, with a further 1,000 to come over the next three years.
"This has been another quarter of strong progress towards the completion of the restructuring of Barclays," CEO Staley said in a statement.
Staley faces regulatory probes in the U.S. and Britain and criticism from investors following his attempts to unmask a whistleblower at the bank, which market sources including Barclays insiders fear could unseat Staley if the findings are harsh.
Barclays said its core capital ratio, a key measure of financial strength, rose to 12.5 percent from 12.4 percent a year ago.
"The bank continues to ride a capital tightrope," Bernstein analysts wrote in a note.
"UK macro and South African politics will dictate whether BARC escapes another capital raise," they added.
Barclays said it would take a one-off goodwill impairment charge of 884 million pounds on its stake in Barclays Africa Group, which it has given itself 2-3 years to sell down. ($1 = 0.7750 pounds)