Barclays sees profits tumble as investment banking drags

The group posted first quarter pre-tax profits of £793m, down from £1.1bn a year earlier as underlying profits in its corporate and investment banking business dropped 31 per cent.

Barclays also announced talks with AnaCap Financial Partners to sell its 74-branch business in France as boss Jess Staley continues to overhaul the lender.

The lender insisted its core business put in a resilient performance, with profits up 18 per cent to £1.6bn, but said this was dragged lower by loss-making parts of the business.

Mr Staley said the results “show a core business performing well in a challenging environment”.

He added that moves to shed unprofitable divisions are cutting costs “which have a direct impact on our profitability today and mask the true performance of our strong core business”.

“This is the work we need to complete,” he said.

Barclays said it was “cautious” ahead of the June 23 referendum on European Union membership.

On second quarter trading so far, it said there had been little improvement for the investment banking business, with income down slightly further on a difficult first quarter, although the group added it was “too early” to comment on overall performance in the second quarter.

The update follows a dismal clutch of earnings on Wall Street after the new year stock market turmoil caused a collapse in trading and fee income.

Barclays had already warned over first quarter trading, saying alongside its annual results in March that figures were set to be weaker than last year in the face of turbulent market conditions and a ‘’particularly strong March in 2015’’.

Bosses are set to face shareholders at its annual general meeting on Thursday as criticism mounts over Mr Staley’s pay deal amid falling profits.

Investors have seen the stock slump by a third in the last six months, while dividend payouts will more than halve over the next two years.

Analysts at Bernstein warned of tough times ahead, pointing to the potential for a spike in credit card impairments risk, weak investment banking performance and the uncertainty of disposals that Barclays is betting on to shore up its capital.

Antony Jenkins was sacked and replaced as chief executive of the bank last year.

He became chief executive in summer 2012, replacing Bob Diamond, who left the bank in the wake of its involvement in the Libor scandal, which saw banks attempt to fix the key interest rate.

Mr Jenkins promised to bring a new culture of decency to the bank.

At the time John McFarlane said that independent directors of Barclays had been concerned about Mr Jenkins’s style.