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Barclays sees rise in Q1 profit to 12%
By Robert Barr |
May 8, 2009, Friday
|
Print Edition
Print Edition
FIRST-QUARTER net income at Barclays PLC rose 12 percent from a year ago as investment banking profit surged from the acquisition of United States assets of bankrupt Lehman Brothers, though the bank posted a steep 79-percent jump in writeoffs on bad investments due to the financial crisis.
First-quarter profit came in at 826 million pounds (US$1.25 billion) compared to 736 million pounds in the first three months of 2008. Revenue surged 42 percent to 8.15 billion pounds.
"Overall, we haven't seen much to change our view that the strong first-quarter trading performance will prove unsustainable, leaving Barclays and the rest of the banks vulnerable to further rises in impairments," said Sandy Chen, an analyst at Panmure Gordon & Co.
Impairment charges and other credit provisions rose to 2.3 billion pounds compared to 1.3 billion pounds a year earlier, a rise it said was in line with expectations.
"During the rest of the year, we expect the loan loss rate to increase further across all business lines and the rate of increase across our international books to be higher than our UK books," it added.
Pretax profit from investment banking soared 189 percent to 1.05 billion pounds, reflecting the Lehman Brothers acquisition. However, that purchase was also a major factor in driving operating expenses up 37 percent to 4.46 billion pounds.
Pretax profit from retail and commercial banking fell 45 percent to 586 million pounds.
Trading in April was in line with February and March, following an "exceptional" January, the bank said.
Barclays has turned to private investors in the Middle East to boost its capital position rather than take on the government as a shareholder.
First-quarter profit came in at 826 million pounds (US$1.25 billion) compared to 736 million pounds in the first three months of 2008. Revenue surged 42 percent to 8.15 billion pounds.
"Overall, we haven't seen much to change our view that the strong first-quarter trading performance will prove unsustainable, leaving Barclays and the rest of the banks vulnerable to further rises in impairments," said Sandy Chen, an analyst at Panmure Gordon & Co.
Impairment charges and other credit provisions rose to 2.3 billion pounds compared to 1.3 billion pounds a year earlier, a rise it said was in line with expectations.
"During the rest of the year, we expect the loan loss rate to increase further across all business lines and the rate of increase across our international books to be higher than our UK books," it added.
Pretax profit from investment banking soared 189 percent to 1.05 billion pounds, reflecting the Lehman Brothers acquisition. However, that purchase was also a major factor in driving operating expenses up 37 percent to 4.46 billion pounds.
Pretax profit from retail and commercial banking fell 45 percent to 586 million pounds.
Trading in April was in line with February and March, following an "exceptional" January, the bank said.
Barclays has turned to private investors in the Middle East to boost its capital position rather than take on the government as a shareholder.
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