Earnings

Barclays first-quarter profit tumbles 10% amid tough market conditions

Key Points
  • The U.K.-based bank posted pre-tax profit of £1.5 billion for the first three months of the year, down from £1.7 billion over the same period a year earlier.
  • That marked a pre-tax profit fall of 10% amid a plethora of macroeconomic headwinds.
  • Shares of the bank slipped more than 1.5% Thursday morning.
Barclays Bank's UK headquarters in Canary Wharf, London.
Matt Crossick/PA Images via Getty Images

Barclays first-quarter profit fell 10% over the first three months of the year, amid challenging market conditions and lingering concerns over Brexit.

The U.K.-based bank posted pre-tax profit of £1.5 billion ($1.93 billion) for the first three months of the year, down from £1.7 billion over the same period a year earlier. That marked a pre-tax profit fall of 10% amid a plethora of macroeconomic headwinds.

Market participants are anxious to understand exactly how the bank plans to navigate weak economic growth projections in the U.K. and the euro zone, ongoing uncertainty over trade and Brexit and a much weaker outlook from the European Central Bank and the Bank of England.

Here are some of the key takeaways:

  • First-quarter pre-tax profit came in at £1.5 billion, down from £1.7 billion a year ago.
  • Net profit for the first three months of the year came in at £1.03 billion, vs. £918.7 million expected.
  • The bank's core capital ratio slipped to 13%, down from 13.2% at the end of the previous quarter.

Barclays said Thursday that if tough market conditions persist over the coming months, it could be forced to reduce annual costs in 2019 below the £13.6 billion to £13.9 billion range it had previously said it expected to spend.

The bank reported £1.03 billion in net income for the first three months of the year. Analysts polled by Reuters had been expecting first-quarter net income to come in at around £918.7 million.

Shareholder unrest

The bank has been faced with intensifying pressure from its shareholders in recent months, with CEO Jes Staley eager to prove that his turnaround plan for the investment bank is on track.

Returns in the bank's under-pressure investment units fell to 9.5% in the first quarter, down from 13.2% in the same three-month period a year ago.

Activist investor Edward Bramson, who is currently locked in a public dispute with Staley, wants to reduce resources allocated to Barclays' investment units in order to boost overall group returns.

Staley has repeatedly defended this part of the bank, arguing the success of its investment units will be crucial for Barclays' long-term success and global ambitions.

In February, U.S. hedge fund Tiger Global Management dumped all of its stake in Barclays. The New York-based firm had been one of the top 10 investors in Barclays and held a 2.5% stake.

Shares of the bank slipped more than 1.5% Thursday morning.