Adjusted profit before tax in the first quarter was down 25% to £1,786mln, after the company booked a £514mln charge related to its “Transform” programme.
Antony Jenkins, chief executive, said the one-off costs reflected the bank’s immediate priorities to reduce its European retail branch network, and to reposition its equities and investment banking operations in Asia and Europe.
Conscious, no doubt, of the likely reaction to the earnings shortfall, Jenkins asserted: “In our goal to become the 'Go-To' bank we have not chosen an easy path for Barclays, but we have chosen the right one."
Investment analysts following the stock had pencilled in a figure of £2.1bn for underlying pre-tax profit.
As ever, those investment analysts were likely most interested in the performance of Barclays’ Investment Bank division (BarCap), which is the main generator of profits. On an adjusted basis, the Investment Bank’s pre-tax profit rose 11% to £1,315mln from £1,182mln the year before.
That was pretty much in line with the £1.3bln forecast by City broker Investec.
Total income for the Investment Bank edged up 1% to £3,463mln from £3,436mln a year earlier. That topped Investec’s forecast of £3.2bn.
There was plenty of good news for the bank, however, including an improvement in the core Tier 1 ratio – a key measure of balance sheet strength – to 11.0% from 10.8% in the first quarter of 2012, while credit impairment charges fell 10% to £706mln.
Notwithstanding the issues with the exceptional charge, the company maintained it made a good start to the year in the first quarter and that this has continued into the second quarter.
“Although the macroeconomic environment remains unpredictable, as part of the Transform programme, we continue to focus on costs, returns and capital to drive sustainable performance improvements,” the bank said.
The company has declared an interim dividend of 1p, maintaining its tradition since 2010 of paying a penny dividend in each quarter except the last of the year.
After initially falling back on the results to 293.6p from 298.3p overnight, the shares quickly picked up and after half an hour of trading were up 2.1% to 304.6p.