Barclays tops Footsie fallers as BarCap's growth slows


A jump in investment banking profits at Barclays of 62pc in the first quarter couldn't mask disappointment at the 26pc slide in revenues.

Barclays Capital, the investment banking arm run by Bob Diamond, is still powering earnings at the bank - accounting for 81pc of group profits - but a marked slowdown in its growth suggests the halcyon days seen during the wake of the credit crisis are now over.

Though profits at the division surged to £1.5bn from £907m a year ago, this was because in the prior year it had written off £1.9bn of toxic credit investments. Revenues, which are the best indicator of the level of business coming in, slid 26pc to £3.8bn.

Barclays promotion

Little to celebrate: Revenues at BarCap fell by more than a quarter

Barclays blamed weaker demand for commodities and fixed-interest products. A year ago, BarCap had been thriving on a surge in interest rate-related products, as nervous investors looked for safe havens.

Barclays shares fell 23p to 338.25p. Investors wonder why Diamond's division didn't see the stellar growth reported by many of the American investment banks. 

Jonathan Pierce at Credit Suisse described the result as 'disappointing', speculating that analysts may need to take the red pen to next year's forecasts. Keith Bowman, at stock broker Hargreaves Lansdown, said the update 'appears to be reminding investors that the road ahead will be bumpy'.


47pc growth in pretax profits to £1.8bn

Investment banking is 4/5ths of earnings

Bad debt charges down a third to £1.5bn

1p dividend for first quarter

Barclays shares down 6pc - top of FTSE fallers

That said, had it not been for the profits pulled in by BarCap, the bank would not be looking half as healthy as it is. Diamond has still set aside £1.4bn for pay and bonuses for the quarter.

BarCap accounted for 81pc of group pre-tax profits, and some analysts fear this is too much - particularly in a climate when some politicians are calling for banks to be broken up.

Profits in the retail banking arm were down 6pc to £403m, due to a slump in earnings at Barclaycard. Barclays' high street earnings in the UK were up 20pc and this was due to its acquisition of Standard Life Bank.

At the group's annual general meeting yesterday at London's Royal Festival Hall, directors were repeatedly praised for steering the bank through the crisis without having a direct taxpayer bail-out.

But shareholders remain wistful for the days when the share price was above £7, as well as being concerned about pay.

Chairman Marcus Agius said the bank was acutely aware of 'the reputation of the banking industry falling to dangerously low levels' amid concern over banker pay and the burden on the taxpayer. He said Barclays was working hard to rebuild trust.

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