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First-quarter pretax profit up 16%
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Shares rise 4% in early trading
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Income from investment banking fees dips by 7%
(Adds detail, CFO quote and context)
By Lawrence White and Iain Withers
LONDON, April 27 (Reuters) - Barclays reported
better than expected first-quarter profit of 2.6 billion pounds
($3.24 billion) on Thursday after strong performance at its
credit card business offset pressure on other profit engines,
including investment banking.
The British bank's 16% profit jump from a year earlier beat
analyst forecasts of 2.2 billion pounds in a robust set of
results that underlined its increasing ties to the United
States, where it has grown its investment and consumer banking
businesses. Its strategy is in contrast to UK peers such as HSBC , which have pared back in the world's biggest economy.
Citigroup and American Express have also booked higher
revenue from credit card spending in recent weeks but had to set
aside larger sums to cover potential defaults.
Analysts at JPMorgan said Barclays' figures could lead to
upgrades in forecasts for the bank's full-year profit. Barclays
shares rose 4% in early trading, outperforming a 0.8% rise in
the STOXX European banks index .
Income at Barclays' consumer, cards and payments division
rose 47% to 1.3 billion pounds thanks to rising credit card
balances driven partly by its acquisition of a portfolio from
retailer Gap last year.
But there were signs higher credit card spending could have
a sting in the tail. The bank's bad loans provision for the
quarter soared to 524 million pounds from 141 million a year
earlier, which it blamed mainly on its U.S. cards business.
Barclays finance chief Anna Cross told reporters that the
bad loan charge reflected higher card balances and a
"normalisation" of behaviour by consumers, adding that the
figure was still below levels before the COVID-19 pandemic.
Investment banking, a source of strength in recent quarters,
was more mixed, with income from its global markets trading
business sliding 8% and fees from advising on corporate mergers
and fundraisings down 7%.
Mergers and acquisitions activity shrank to its lowest in
more than a decade in the first quarter as rising interest rates
and high inflation reduced appetite for dealmaking.
Fixed income, currencies and commodities (FICC) was a bright
spot, with income rising 9% to 1.8 billion pounds. Transatlantic
rival Morgan Stanley this month reported a 12% fall in
FICC revenue.
The bank made no further charges for an earlier administrative trading error that has blighted recent results and led it to agree a $361 million penalty with U.S. regulators last year for "staggering" failures in overselling $17.7 billion of structured products. ($1 = 0.8019 pounds) (Reporting by Lawrence White and Iain Withers Editing by Sinead Cruise and David Goodman)
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