Barclays Profit Drops Amid Challenging Time for UK’s Big Banks

April 28, 2016

By Thy

Just like how it went after BP announced its better-than-expected results on Tuesday, Barclays investors were cheerful on the first quarter results of the bank on Wednesday although it had posted a 25% drop in profit.

Group revenue declined 11% to £5 billion for the first three months, dragged down by legacy operations and lower investment-banking returns. However, the results beat analysts’ expectations, sending shares up 0.5% in London trading.

Barclays is in the process of restructuring under the regime of the new chief Jes Staley. The CEO expects profitability will rise in years ahead with a strategy to turn Barclays into a transatlantic bank.

The bank has also revealed to receive interest in Barclays Africa which was put on sales last month. Staley expects to lower its 62.5% of its stake in the African business to below 20% in two years for capital preservation.

Although the U.S. investment banking arm had better performance than other U.S. rivals, profits in the U.K. arm slumped 2% due to heavy competition in the mortgage market. Britain’s biggest banks were reported to lag behind their European peers in the recovery from the last financial crisis. According to the Financial Times, annual profits of the five biggest banks in the U.K. were still 63% lower than their 2007 high in 2015 while other European banks saw their profits only 34% below their 2007 performance.

Recently, the U.K.’s big four banks including Barclays, HSBC, Lloyds and RBS faced a total payment of £19 billion in fines, compensation and legal expenses in 2016 and 2017 for their misconduct and litigation issues.

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The Barclays screen at Sentifi alerted a great buzz from the financial crowd talking about its latest financial results. This is the second time this month that Sentifi tools detected a significant increase in the number of voices discussing about Barclays. The last event was the OCBC’s acquisition of Barclays’ wealth division in Singapore and Hong Kong on April 7.

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