Barclays Profit Falls on Hit From Debt-Sale Mistake, Deal-Making Slump

LONDON—

PLC said its net profit declined in the first quarter, driven by a hit from a debt-sale flub and lower levels of deal making.

The London-based lender on Thursday said it earned £1.4 billion, equivalent to $1.8 billion, in the three months to the end of March, down from £1.7 billion in the same period last year. Analysts expected the bank to report a £1.55 billion profit for the quarter, according to FactSet. The bank’s compiled forecasts projected £1.32 billion. Revenue increased 10% to £6.5 billion.

The bank also said that a planned £1 billion share buyback program would be delayed until discussions with the SEC about potential restatement of 2021 financials are concluded. The buyback was expected to begin this quarter.

Shares rose 1.2%. Barclays has been trading close to a one-year low and has fallen 23% this year, compared with a 1.4% rise in the U.K.’s benchmark FTSE 100 stock index.

Barclays’s earnings echo the performance of major U.S. banks, which also reported sizable drops in profitability in the first quarter.

Morgan Stanley

and

Citigroup’s

net incomes fell 11% and 46% respectively.

Headwinds include the highest inflation in decades and soaring commodity prices driven by the war in Ukraine which catalyzed turbulence in markets and a decline in deal making. The U.K. is facing a particularly acute cost-of-living crisis, with British households expected to have the biggest fall in real incomes in 30 years.

Chief Executive

C.S. Venkatakrishnan

ran into a sticky situation early in his tenure after Barclays last month said it was facing a £450 million loss and a regulatory investigation. Its U.S. division, in what amounted to a clerical error, accidentally sold more structured notes than was allowed by the Securities and Exchange Commission. It said it expects to buy the notes back at a loss. Mr. Venkatakrishnan was previously the bank’s chief risk officer.

Barclays said it has a provision of £540 million related to this matter and the bank reported a 14% rise in operating expenses largely due to the litigation and conduct charges.

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Profit at Barclays’s corporate and investment bank rose 4% to £1.3 billion during the first quarter, with a decline in investment banking fees but a rise in activity in global markets as the bank supported its clients through the period of volatility. Profit at the bank’s U.K. unit advanced by a third, reaching £396 million.