Barclays PLC, the third-largest bank in the UK by assets, fell the most in 12 weeks after investment banking revenue dropped more than expected in the first quarter.
Revenue at the Barclays Capital unit slumped 26 percent to £3.8 billion (US$5.8 billion) for the three months to March 31, missing the £4.9 billion estimate of analyst Mark Phin at Keefe, Bruyette & Woods Ltd. The shares declined the most since Feb. 4.
“We are skeptical about continued growth at Barclays Capital,” wrote Bruce Packard, an analyst at Seymour Pierce in London, who has a “sell” rating on the stock.
Fixed-income bankers “have worked hard to perpetuate the scientific nonsense of everlasting, compounding growth.”
Barclays Capital, the investment banking unit led by Robert Diamond, hired more than 750 people in Europe and Asia last year, adding equities and mergers and acquisitions advisers, after buying the North American unit of Lehman Brothers Holdings in 2008.
Banks including JPMorgan Chase & Co, Citigroup Inc and Deutsche Bank AG this month posted increased profit for the quarter, aided by fixed-income trading revenue.
First-quarter net income rose to £1.07 billion, or £0.087 a share, from £826 million, or £0.068, in the same period last year, the company said in a statement.
“In the next nine months, we would expect to see new businesses coming on stream,” Barclays Capital president Jerry Del Missier said in a telephone interview, pointing to cash equities and credit business.
“Everyone is focusing on the revenue figure, it’s a disappointment,” Oliver Gilvarry, head of research at Dolmen Securities in Dublin, said by telephone. “The market got ahead of itself on what it was expecting on the revenue side.”
Barclays said impairments fell 35 percent to £1.5 billion compared with the same period a year earlier and down 19 percent from the fourth quarter of last year.
Pretax profit at Barclays Capital outstripped the performance of every other division, rising 62 percent to £1.47 billion in the first quarter compared with the same period last year.
That resulted from a 75 percent fall in impairments and a 66 percent rise in revenue from debt and equity underwriting.
The second-biggest contributor to profit was the global retail banking unit, where pretax profit fell 6 percent to £403 million.
Barclays is accruing 38 percent to 39 percent of revenue in remuneration for employees in its investment bank, finance director Chris Lucas said in a conference call with journalists yesterday. A decision on bonuses won’t be taken until the end of the year, he said.
Barclays Corporate posted a loss of £75 million and the Barclaycard credit card unit’s profit declined 34 percent to £118 million. Profit rose 20 percent at UK consumer banking to £238 million.
TYPHOON: The storm’s path indicates a high possibility of Krathon making landfall in Pingtung County, depending on when the storm turns north, the CWA said Typhoon Krathon is strengthening and is more likely to make landfall in Taiwan, the Central Weather Administration (CWA) said in a forecast released yesterday afternoon. As of 2pm yesterday, the CWA’s updated sea warning for Krathon showed that the storm was about 430km southeast of Oluanpi (鵝鑾鼻), Taiwan’s southernmost point. It was moving in west-northwest at 9kph, with maximum sustained winds of 119kph and gusts of up to 155kph, CWA data showed. Krathon is expected to move further west before turning north tomorrow, CWA forecaster Wu Wan-hua (伍婉華) said. The CWA’s latest forecast and other countries’ projections of the storm’s path indicate a higher
SLOW-MOVING STORM: The typhoon has started moving north, but at a very slow pace, adding uncertainty to the extent of its impact on the nation Work and classes have been canceled across the nation today because of Typhoon Krathon, with residents in the south advised to brace for winds that could reach force 17 on the Beaufort scale as the Central Weather Administration (CWA) forecast that the storm would make landfall there. Force 17 wind with speeds of 56.1 to 61.2 meters per second, the highest number on the Beaufort scale, rarely occur and could cause serious damage. Krathon could be the second typhoon to land in southwestern Taiwan, following typhoon Elsie in 1996, CWA records showed. As of 8pm yesterday, the typhoon’s center was 180km
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STILL DANGEROUS: The typhoon was expected to weaken, but it would still maintain its structure, with high winds and heavy rain, the weather agency said One person had died amid heavy winds and rain brought by Typhoon Krathon, while 70 were injured and two people were unaccounted for, the Central Emergency Operation Center said yesterday, while work and classes have been canceled nationwide today for the second day. The Hualien County Fire Department said that a man in his 70s had fallen to his death at about 11am on Tuesday while trimming a tree at his home in Shoufeng Township (壽豐). Meanwhile, the Yunlin County Fire Department received a report of a person falling into the sea at about 1pm on Tuesday, but had to suspend search-and-rescue
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