Barclays profits jump 27% in first quarter

Barclays profits rose 27 per cent in the first quarter as rising global interest rates boosted its income from retail banking and credit cards, offsetting a weaker performance at its investment bank.

Net profit increased to £1.8bn from £1.4bn in the same period last year, beating analysts’ expectations by about £400mn, the bank said on Thursday. Revenue rose 11 per cent to £7.2bn, exceeding the £6.8bn estimate.

The performance was led by Barclays UK, its ringfenced consumer lender, where profit jumped 30 per cent to £515mn. The bank said this was “primarily driven by net interest income growth from higher rates” with the Bank of England boosting its base rate to a 15-year high of 4.25 per cent last month.

This allowed its net interest margin — the difference between the interest it receives on its loans and the rate it pays for deposits — to grow to 3.18 per cent from 2.62 per cent last year. 

Revenues at its international consumer, cards and payments division surged 47 per cent to £1.3bn as US credit card balances grew.

Despite concerns about inflation and a cost of living crisis, impairments remained low on a historical basis and there was “limited observed deterioration” of its lending book, the bank said. Overall credit impairment charges rose to £524mn from £141mn.

The results will come as a welcome relief after a mixed 2022 for chief executive CS Venkatakrishnan, who has returned to work after successful treatment for blood cancer.

“All three businesses have performed well with high quality income growth and double-digit returns,” Venkatakrishnan said. “The momentum allows us to maintain a robust capital position and deliver attractive returns to shareholders.”

The investment bank was not as buoyant, however, as profits fell 8 per cent to £1.2bn. Overall trading income dropped 8 per cent to £2.5bn as fixed-income revenues rose 9 per cent, but equity trading declined 33 per cent, which the bank blamed on less volatile markets. Advisory and capital markets fees also fell 7 per cent to £603mn.

Litigation and conduct costs in the quarter fell to £1mn from £523mn last year, a positive after a messy 2022 when a trading error led to the bank accidentally selling $17.7bn of structured financial products it did not have authorisation for. It had to settle for $361mn with the US Securities and Exchange Commission and set aside £450mn to compensate investors.