Barclays profits fall less than expected as turnaround strategy progresses

Barclays has shown promising signs of progress in its ambitious turnaround efforts, with quarterly profits falling less than anticipated by the markets.

Coimbatore Sundararajan Venkatakrishnan, known as Venkat, Barclays’ CEO, has been working to address years of underperformance in the stock market, and the recent results suggest that the bank’s overhaul strategy is beginning to yield positive outcomes.

Despite a 12% year-on-year decline in pre-tax profits to just under £2.3 billion, the figure surpassed City analysts’ expectations of £2.2 billion. Venkat expressed satisfaction with the bank’s performance in the first quarter, stating that the progress aligns with the three-year targets set by the company.

The positive results prompted a 6.1% increase in Barclays’ shares, reaching their highest level in two years. Analysts at Peel Hunt noted that the bank’s profit exceeded expectations.

Barclays, one of the UK’s major lenders, is diversifying its business away from its investment bank, aiming to strengthen other areas such as consumer and corporate banking in Britain. This includes recent deals such as the acquisition of Tesco’s retail banking business and the sale of an Italian mortgage portfolio.

Venkat’s strategy also involves cost-cutting measures, job reductions, and returning at least £10 billion to shareholders over three years. The bank has already achieved £200 million in gross efficiency savings out of the targeted £1 billion this year.

However, Barclays faces challenges amid a tougher banking environment, characterized by increased competition for deposits and mortgages as the boost from higher interest rates fades. Despite these challenges, there are indications that the pressure on margins is easing.

The investment banking division experienced mixed results, with fixed-income, currency, and commodities trading revenues declining by 21%, while equities trading saw a 25% increase in revenues. Overall, group revenues at Barclays dipped by 4% to £7 billion.

Despite the challenges, the bank’s progress in the first quarter suggests that Venkat’s turnaround plan is gaining traction, offering hope for improved performance in the future.

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Barclays profits fall less than expected as turnaround strategy progresses