Barclays profit more than doubles to £2.4bn, as it shifts call centres to UK from India
Barclays’ profit more than doubled in the first quarter despite not releasing cash set aside to cover bad loans from the pandemic like its British rivals.
The bank posted a pre-tax profit of £2.4bn for the first three months of the year, up from £923m in the same period a year earlier and beating an average analyst forecast of £1.76bn.
The lender took an impairment charge of £55m for further bad loan charges, which was also much less than analysts’ predictions.
The upbeat results followed similarly positive news from HSBC and Lloyds earlier in the week, as British banks benefited from government job support schemes.
UK lenders have been more cautious than their US peers such as JP Morgan, which released more than $5bn it had set aside to cover bad loans earlier this month.
Barclays’ strong results came despite a mixed performance from its investment bank, where its currencies and commodities unit saw income fall by 35 per cent.
The lender put this down to a slump in client demand compared to the frenzied start of 2020.
It was offset, however, by a 65 per cent spike in equities trading incomes, mainly due to derivatives.
The stocks boom also strengthened its banking advisory business, as income rose 35 per cent to £859m.
India
Jes Staley, CEO of Barclays, said the bank will continue to deliver for its shareholders throughout the year by staying profitable in every quarter.
“As we enter the next phase of this pandemic, we remain resolute in our commitment to support the economic recovery.
“From our spend data, which captures UK economic activity across our cards and acquiring businesses, we are already seeing encouraging early signs of recovery in some sectors, including those hit hardest by the crisis.”
Barclays has shifted some of its call centre operations to the UK from India. Throughout India’s latest wave, which has seen record numbers of new daily cases, employee’s have had to work flexibly.
The bank is also set to review its office routines, gearing towards a hybrid working model as 20,000 employees in India have been forced to work from home, Staley said.
“We were very mindful that a number of employees need to stay home now, they’ve got family that are sick that they need to take care of,” the CEO continued.
“We are making payments, but allowing them to help their families manage through this pandemic. It’s a very tough place right now.”
Although high street stores will remain, they will likely feel the pressure later this year as customers continue to shift to online banking.
Meanwhile, Richard Hunter, head of markets at Interactive Investor, said that despite a record quarterly profit, Barclay’s situation is not as straightforward “under the bonnet”.
“Unlike its peers, Barclays did not make a provisions release but rather a significantly smaller impairment charge of £55m. This compares to £2.1bn a year ago, and is the key driver for a somewhat cosmetic boost to the profit number.
“In terms of actual trading, income fell and costs rose, with the inevitable effect of a worsening cost/income ratio, up to 61 per cent from 52 per cent the previous year. These factors have led to some investor disappointment in early trade.”