Profits At Barclays PLC’s Investment Bank Cut By Half

Shares in Barclays (LSE: BARC) fell by 10p, or 4%, to 249p during early trade this morning after the bank saw profits sink by half at its investment banking unit.

Pre-tax profit at the investment bank fell 49% to £668m in the three months to 31 March. This is attributable to new regulations, such as the Basel III agreement, which have increased costs for some activities.

barclaysThe investment bank’s performance meant Barclays’ adjusted pre-tax profit fell 5% to £1.7bn. Meanwhile, profit from UK retail and business banking increased 20% to £399m.

Barclays compensation to income ratio increased to 46% from 41%, as falling costs were negated by a larger drop in revenues. Barclays chief executive, Antony Jenkins, is aiming for a ratio in the mid-thirties.

Jenkin’s had the following to say on today’s results:

“UK Retail, Barclaycard and Corporate together drove approximately half of the Group’s income this quarter and we remain well positioned to benefit from further improvements in the economic environment.”

“I am pleased to report the lowest operating expenses, excluding cost to achieve Transform (CTA) spend, since 2009. This reflects the results of our cost programme.”

“As previously announced, I will update the market on Barclays strategy to deliver improved and sustainable returns and growth for our shareholders on 8 May 2014.”

Barclays shares offer a prospective income of 3.7% covered 2.6 times by earnings. Of course, the decision to ‘buy’ — taking into account those metrics and today’s statement — is entirely your decision.

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Mark does not own shares in Barclays.