Barclays has experienced a seven per cent drop in pre-tax profits following a decline in investment bank revenue.
The bank reported an 18 per cent reduction in income at its investment banking division which resulted in overall pre-tax profits of £3.35 billion. This has resulted in slightly disappointing pre-tax profits in the six months to the end of June. Barclays explained that the poor performance of its investment bank could not be rectified despite strong contribution from the retail and Barclaycard businesses.
Barclays has already looked at restructuring its investment bank division and recently announced that it would be cutting 7,000 jobs as part of the 19,000 losses over its entire operations. The bank added that it had set aside around £900 million to compensate customers that had been mis-sold Payment Protection Insurance (PPI). This took its overall total to £5 billion to cope with a scandal that has affected many retail banks.
Speaking about Barclay's latest financial results, Antony Jenkins, the bank's chief executive, said: "Performance in the investment bank was impacted by the repositioning under way as well as difficult trading conditions in the quarter, but it is where we expected it to be at this point."
Barclays also experienced a five per cent drop in investment bank income in its first-quarter financial statement, published in May. The bank reported an adjusted profit of £1.69 billion driven by a 28 per cent fall in revenue at its investment banking business. This has prompted Barclays to re-think its current strategy and announce a restructuring of this arm of its operations.
The bank blamed the change in revenues on "subdued client activity" and a reorganisation of its business but the continued drop in profits has forced it to take more decisive action.
Despite the recent poor profits, Barclays' share price was up 3.23 per cent to 226.15 as 09:10 BST on July 30th.
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