Barclays received a boost from the city despite an exceptional rise in quarterly profits to £ 2.4bn and growing optimism about the UK’s recovery from the COVID-19 slowdown.
The lender made a profit of £ 2.4bn between January and March, up from £ 923m a year ago when the economy was clouded by the prospect of extended lockdowns.
But shares fell nearly 6% as the UK-based group’s investment arm posted mixed performance and its Barclaycard business slipped with consumer spending still under pressure.
Barclays also warned it faces higher costs this year than last year, in part due to an ongoing review of how much office space it will need in a busy environment. post-pandemic hybrid work.
The profit figure, which represents Barclays’ best quarterly performance in 13 years, came when chief executive Jes Staley adopted a bullish tone for the coming months for the economy.
Mr Staley has subscribed other recent forecasts predicting the UK’s strongest annual growth since the 1940s – after suffering its biggest collapse in three centuries last year.
He said spending data gathered by the bank meant it “was already seeing encouraging early signs of recovery in some sectors, including those hardest hit by the pandemic.”
Mr Staley said that in the first two weeks of April – after the end of the earnings period – spending figures increased by 70% compared to the same period a year ago.
“We are starting to see a fairly robust economic recovery in 2021 and we believe that will continue until 2022,” he added.
However, the bank has taken a seemingly more cautious stance than rivals such as HSBC, Lloyds and Natwest, who have started to recoup some of the billions of dollars set aside to cover losses from delinquent loans during the pandemic.
Instead, Barclays have set aside an additional £ 55million provision, although this is far less than the £ 2.1billion blow it took for the same period a year ago. .
In its investment banking arm, the firm benefited from a boom in the markets thanks to high levels of trading in derivatives and fees on stock market fundraising – but experienced a downturn in its bond, currencies and raw materials compared to a hectic period in early 2020..
Barclays said in the first quarter its business serving UK consumers was curtailed, as with other lenders, by low interest rates, although mortgages rose by 3.6 billion euros. pound sterling.
Barclaycard revenues in the UK fell 28% amid “reduced borrowing and spending” from customers, with a similar picture for the card industry in the rest of the world.
Russ Mold, chief investment officer at AJ Bell, said: “According to Barclays Managing Director Jes Staley, the time may have come for a boom for the UK economy, but not for the company itself judging by reaction to its latest trade update.
“The decision not to adjust its previous bad debt estimates, unlike most of its peers, appears to have spooked the market with patchy investment banking performance and a cautious view of costs as Barclays seeks to reduce its physical footprint.
“Fewer of us seem to splurge our locked-out credit cards judging by Barclaycard’s performance, perhaps because of the belt tightening on one side and the other because some people have built up a cash reserve and therefore do not need to use credit. “