Barclays’ profits fall less than expected as its turnaround strategy progresses

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

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

Despite a 12% year-on-year decline in pre-tax profits to just under £2.3bn, this figure exceeded City analyst expectations of £2.2bn. Venkat expressed satisfaction over the bank’s performance in the first quarter, stating that the progress is in line with the company’s three-year targets.

The positive results sent Barclays shares up 6.1%, reaching a two-year high. Peel Hunt analysts noted that the bank’s profit exceeded expectations.

Barclays, one of Britain’s largest lenders, is diversifying its business away from investment banking, 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 includes cost-cutting measures, job cuts and returning at least £10 billion to shareholders over three years. The bank has already delivered £200 million in gross efficiency savings out of the targeted £1 billion this year.

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

The investment banking division posted mixed results, with fixed income, currency and commodity trading revenues down 21%, while equity trading revenues increased 25%. Overall, group revenues at Barclays fell 4% to £7 billion.

Despite the challenges, the bank’s progress in the first quarter indicates that Venkat’s turnaround plan is gaining momentum, offering hope for better performance in the future.