Barclays profit surges ahead of expectations on interest rate boost

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Banking giant Barclays has reported a record-high profit for the first three months of the year as higher interest rates bolstered its income in the UK.

The international bank said it made a pre-tax profit of £2.6 billion in the first quarter of the year, jumping well ahead of analysts’ expectations of a £2.2 billion profit, and 16% higher than this time last year.

It marks the highest quarterly profit since 2011 when accounting standards changed, Barclays said.

Barclays’ UK business saw its net interest income, the difference between what a bank earns from loans and pays for savings, surge by a fifth compared to the same quarter last year, to £1.6 billion.

This was driven up by higher interest rates across both personal and business banking, Barclays said.

Furthermore, its corporate and investment bank recorded the second highest quarterly income on record, at nearly £4 billion.

But the bank noted that investment activity remained subdued and it saw investment banking fees drop by 7% over the period.

CS Venkatakrishnan, Barclays group chief executive, said: “This is a strong first quarter with group income up 11% to £7.2 billion and profit before tax up 16% to £2.6 billion, generating a group return on tangible equity (RoTE) of 15% and earnings per share (EPS) of 11.3p.

“All three businesses have performed well with high quality income growth and double-digit returns.

“The momentum across the group allows us to maintain a robust capital position, deliver attractive returns to shareholders and support our customers and clients through an uncertain economic environment.”

The bank’s boss, known within the group as Venkat, also touched on the failures earlier this month of Silicon Valley Bank and Credit Suisse which sparked fears other banks could be in a precarious financial position.

“The Credit Suisse situation was developing over a long time and, most importantly in my opinion, they had many, many quarters of losses and they were not a profitable bank,” he said.

Barclays cash machines
Barclays said income for the group’s consumer, cards and payments division shot up by 47% (Mike Egerton/PA)

“From the numbers we have produced over the last number of quarters, you can see we are extremely profitable through good times and bad.”

Looking ahead, Venkat said the macro economic outlook around the world is slightly better than it was six months ago but it “doesn’t mean we out of the woods”.

“We have seen volatility in elements of the banking sector – they have been very specific to the institutions involved, but it does cast a bit of a shadow over the rest of the sector,” he said.

“That has calmed down a lot but it has not completely disappeared so it drives a little caution in our outlook.”

The remarks marked the first occasion Venkat has led the bank’s financial results since he announced he was receiving treatment for non-Hodgkin lymphoma, a type of cancer, in November.

The executive did not step down from his role during that time, continuing to be “actively engaged” in managing the bank.

He announced he had completed the treatment last month and was in remission.

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