By Lawrence White and Sinead Cruise
LONDON (Reuters) – Barclays set aside 2.1 billion pounds ($2.62 billion) to cover a likely spike in loan losses as thousands of its corporate and consumer borrowers battle to cope with the financial fallout from the COVID-19 pandemic.
The British bank booked first-quarter pretax profits of 923 million pounds, down 38% from 1.5 billion pounds in the first quarter of 2019 and shy of the 1.27 billion pounds average of analysts’ forecasts compiled by the bank.
Barclays said the impact of the coronavirus hit late in the first quarter and was likely to linger, striking a less positive tone than Standard Chartered which earlier on Wednesday reported a 12% dip in profit for the period.
“Given the uncertainty around the developing economic downturn and low interest rate environment, 2020 is expected to be challenging,” Chief Executive Jes Staley said.
The bank said the impairments number included a 405 million pound hit from single name wholesale loan charges, while 1.2 billion pounds was set aside for expected bad loans due to the poorer economic outlook and lower oil prices.
Barclays said group income rose by 20% to 6.3 billion pounds, boosted by a surge in activity in its transatlantic investment bank where pretax profits leapt by 42% to 1.2 billion pounds.
The fixed income, currencies and commodities division was the investment bank’s strongest performer over the quarter, generating a 106% rise in income to 1.9 billion pounds as it cashed in on sharp global market swings in some of the world’s largest economies.
Despite the tougher economic environment, Barclays said it still believed its return on tangible equity target of greater than 10% remained appropriate over time. It delivered a group ROTE of 5.1% over the first quarter, while the investment bank chalked up 12.1%.
($1 = 0.8013 pounds)
(Additional reporting by Iain Withers. Editing by Jane Merriman)