Barclays is set to face further scrutiny from shareholders this year over its investment banking unit after it reported a 28 per cent income fall and halving of profits for the unit in the first three months of this year.
Income fell to a little less than £2.5bn, pushing profits down 49 per cent to £668m compared with £1.32bn for the same period last year. Overall adjusted profit before tax fell 5 per cent to £1.69bn.
The hit taken by the group’s profits because of problems with the investment banking arm come just weeks after shareholders including Standard Life slammed the bank’s proposed bonus hike in the wake of a similar slide through 2013.
At the Barclays annual general meeting last month, more than a third of investors refused to back the bank’s remuneration report, with shareholders arguing the bank should not have increased bonuses in a year when the bank’s profits fell by more than a third.
Alison Kennedy, governance and stewardship director at Standard Life, Barclays’ sixth largest investor, said: “We are unconvinced that the amount of the 2013 bonus pool was in the best interest of shareholders.”
The banking giant blamed the fall in income at the start of this year primarily on “challenging trading conditions resulting in subdued client activity across rates and credit”, as well as changes in “business mix” in light of the ongoing strategic review of the investment bank.
The results revealed a profit before tax decreasing 5 per cent was driven by UK Retail, Barclaycard and Corporate, which together drove about half of the group’s income this quarter.
Antony Jenkins, group chief executive of Barclays, said the bank remains focused on balance sheet and capital.
He will update the market on Barclays strategy to deliver improved and sustainable returns and growth for our shareholders on Thursday (8 May).
Mr Jenkins said: “This plan will address issues underlying the performance challenges we have recently experienced, including positioning the investment bank for the new operating and regulatory environment.”
