Barclays Profit Down 7%, but Bank Reports Progress in Strategy Shift

http://www.nytimes.com/2016/04/28/business/dealbook/barclays-earnings-q1.html

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LONDON — Barclays continues to pare back its operations as it accelerates a strategy shift announced last year, while first- profit took a hit from the industry-wide slowdown in investment banking and markets.

James E. Staley, who joined Barclays as chief executive in December, is seeking to turn around the bank by accelerating the sale of businesses it does not consider core operations and by focusing its strategy around two divisions: the British consumer bank, and the corporate and investment bank.

The bank said on Wednesday that it was in exclusive discussions with the private equity firm AnaCap Financial Partners about the potential sale of its retail operations in France, including 74 branches, a French life-insurance business and wealth and investment management operations. Barclays said the discussions did not include its corporate and investment banking operations in France, which it would continue to operate.

A sale would complete Barclays’ exit from retail banking in Continental Europe. It has sold operations in Italy, Portugal and Spain in recent months.

First-quarter profit fell 7 percent, to 433 million pounds, or about $630 million, compared with the same period last year, Barclays said Wednesday. .

Pretax profit of £793 million fell short of analysts’ expectations.

“This quarter we have made good early progress against the strategy update we announced on the 1st of March,” Mr. Staley, who is known as Jes, said in a news release. The results showed “a core business performing well in a challenging environment,” he said.

Operating income, which is similar to revenue in the United States, declined 13 percent to £4.59 billion in the first quarter, from £5.26 billion in the same period a year earlier. Operating expenses were down 7 percent to £3.83 billion in the quarter.

Barclays also said that it continued to “explore opportunities” to reduce its stake in Barclays Africa Group after saying in March that it planned to shed its 62.3 percent interest in the business, which has proved to be a regulatory drag on the bank. The update came a day after the investment company Atlas Mara Limited,a firm backed by the former Barclays chief executive Robert E. Diamond Jr., said it was in discussions with a group of investors exploring a bid for Barclays’ business in Africa.

The African business was considered one of four pillars of Barclays’ strategy, alongside its credit card and its consumer and investment banking operations, under Antony Jenkins, who was ousted as chief executive in July.

“We are pleased with the level of indicative interest in what is a high quality business,” Mr. Staley said on Wednesday. “Barclays Africa is an important partner, and we are working closely with local management, including on the planning for the operational separation of the two businesses, in a way that will preserve value for shareholders in both groups.”

In its corporate and investment bank, Barclays reported a pretax profit of £701 million in the quarter, from £292 million in the first quarter of 2015.

On an underlying basis, pretax profit in the corporate and investment bank declined 31 percent in the quarter, driven by a decline in income from its banking and markets businesses, increased impairment charges and higher operating expenses, Barclays said.

The underlying profit for the first quarter of 2015 did not include an additional legal provision of £800 million the bank took related to currency market investigations in the United States.

“The performance of our corporate and investment bank was relatively resilient in a tough quarter, but there is more we must do to improve returns, and we are focused on management actions to do so,” Mr. Staley said.

In its British consumer bank, Barclays reported a pretax profit of £704 million in the first quarter, down from £844 million in the same period a year earlier.

Barclays’ noncore businesses, which it is trying to wind down or sell, reported a loss of £815 million in the quarter, from £310 million in the first quarter of 2015.