Barclays made a mammoth reservation for bad loans in the first quarter led by the hostilities in the global market and a single name charge in its investment banking division.
The blue-chip lender set aside £823m for potential loan losses, up from £643m in the same period last year, in a stark sign the firm was bracing for an economic crunch.
Shares in Barclays slumped three per cent as the market opened to 414.40p.
A major portion of the provisioning came after the investment banking division recorded a charge of £279m. Around £228m of this – 82 per cent – was cited as coming from a single name charge related to the collapse of specialised lender MFS.
“I am disappointed to recognise… a single name charge in the first quarter,” CS Venkatakrishnan – known as Venkat – said.
“This was in our securitised products business, and relates to a well-publicised, sophisticated fraud.”
He added the fraud, as with the case with tricolor, had led to the firm “constraining lending to certain structured finance counter parties who operate more vulnerable business model”.
The bank’s headline charge fell broadly in line with what Barclays was expected to set aside, as banks build up their buffer following the turmoil in Iran that has triggered fears of a global energy shock.
Still, Barclays managed to eke out a three per cent increase in pre-tax profit at £2.8bn, falling in line with analyst consensus. It was also modestly up from the £2.7bn scored in the same period last year, though some growth was held back by the provision.
A £500m buyback was launched on the back of the results, following the completion of its previous £1bn program.
Chris Beauchamp, chief market analyst at IG, said: “News of a fresh share buyback was countered by the credit impairment that raises a worrying red flag for the banking sector.
“Now investors will wait to see if the other UK lenders have to follow suit.”
Barclays investment bank posts a boom despite blip
The bank’s revenue came in at £8.2bn, up six per cent year-on-year.
Barclays’ net interest margin – a key indicator of its profitability from lending – swelled to 4.83 per cent from 4.51 per cent previously. The expansion was attributed to higher income from its structural hedge – a strategy used to protect income from interest rate volatility – and “partner reward updates” within the US Consumer Bank.
Amidst the volatility in the global market triggered by the Iran war, Barclays’ investment bank proved once more to be the standout performer.
The division secured just north of £4bn in total income, marking the first time quarterly income has done so. But pre-tax profit came in at £1.6bn, primarily due to impairment charges.
Barclays was tipped by analysts to cash in on the market volatility of the first-quarter.
The bank’s mammoth markets division served as a shield to economic turmoil as it shored up extra profit from the trading frenzy. Jefferies analysts estimate the bank’s income from high-speed market volatility trading is 3.5 times larger than the fees pocketed from traditional investment banking.
Markets were rocked in the first few months of the year as global indexes tumbled whilst energy prices rocketed. The nerves saw the FTSE 100 slip under the 10,000 milestone, whilst Barclays own share price has taken a ten per cent hit since the start of the year.
The investment banking haul of the first-quarter of 2026 echoes a similar fate to 12 months prior, where Barclays scored a £2.7bn pre-tax profit, ahead of analyst expectations.
