British bank Barclays on Wednesday reported slight beats on the top and bottom line in the first quarter, boosted by stronger investment bank performance.
Pre-tax profit came in at £2.7 billion ($3.6 billion), up 11% year-on-year and ahead of analyst expectations of £2.49 billion, according to LSEG. Group revenues hit £7.7 billion, above an analyst projection of £7.33 billion.
Income from investment banking, its most profitable division, increased 16% to £3.87 billion.
Barclays’ return on tangible equity, a measure of profitability, reached 14 % in the first quarter, after averaging 7.5% in the December quarter.
Shares were 2% higher in early deals in London.
Key to investors is how Barclays navigates its sizable U.S. exposure in the market storm unleashed by U.S. President Donald Trump’s global trade tariffs. Notably, Barclays has had a significant presence Stateside since acquiring the investment banking and capital markets businesses of collapsed Wall Street titan Lehman Brothers for $1.75 billion.
Speaking to CNBC’s “Squawk Box Europe” on Wednesday, Barclays CEO C.S. Venkatakrishnan said he was expecting “fairly high market volatility” going forward.
“It’s calmer now but I imagine it will continue to go up and down. Beyond that, as you’ve seen in our results, that market volatility helps us help clients manage their risk, we can do so in a profitable way that helps them as well and helps markets income, as long as you manage your risk well,” he said, pointing to strong fixed income trading as a highlight from the earnings.
Venkatakrishnan continued, “I think, going forward, the longer this goes on, the greater economic uncertainty there is, which is putting companies off from making decisions. Individuals also take time to make decisions, you could have a risk of a slowdown in economic activity.”
“Even though we have a good starting point, we have to be prepared” for a range of scenarios, he told CNBC, including economic weakness in its major markets of the U.K. and the U.S.
The British lender’s U.S. consumer bank business has made strides, delivering a 9.1% return on tangible equity in 2024, from 4.1% in 2023. Income at the unit nudged 1% higher to £864 million in the first quarter, though profit before tax slid 7% to £55 million.
Barclays share price.
In a Wednesday note, analysts at RBC Capital Markets said the pre-tax profit beat was driven by income but partially offset by higher than expected impairments.
The bank’s exposure to the U.S. consumer and investment banking is likely to weigh on the stock more than on other U.K. banks until the “rhetoric around global trade wars subsides,” they added.
Barclays shares took a steep tumble as the White House kicked off its trade war on April 2, but recovered thereafter and remain up more than 10% in the year to date — in sharp contrast to Swiss giant UBS, whose U.S. foothold and domestic concerns have led to a hemorrhage in stock value.
Barclays’ core U.K. consumer bank unit meanwhile posted 12% higher income of £484 million and 23% higher pre-tax profit of £207 million, supported by its acquisition of Tesco Bank.
Britain could receive a rare economic boon as a result of its divorce from the European Union, after the bloc was struck with 20% in — now briefly suspended — U.S. reciprocal tariffs in early April. London, which only faces 10% in such White House levies, is now attempting to leverage its historic transatlantic relationship and a broadly more balanced trade record with the U.S. to secure a sweeter commercial arrangement. However, a wider slowdown in global trade and growth is expected to weigh on the economy.
Barclays’ pressures at homes have eased, with behemoth HSBC announcing plans to wind down its M&A and equity capital markets businesses in the U.K., U.S. and Europe amid a revamp of its investment operations. And the British unit of Spanish lender Banco Santander — which dethroned UBS to become continental Europe’s largest bank by market capitalization in recent weeks — in March said that 750 of its staff were at risk of redundancy, as it targets 95 branch closures as part of a broader plan to update its footprint from June 2025.
While Santander insists that the U.K. remains a “core market,” the latest move has added to questions whether the Spanish lender intends to exit the British high street.
