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Barclays share price edges lower after 10% fall in Q1 profit

Barclays share price fell slightly on Thursday after the bank recorded a 10% decline in Q1 profit and pressure from activist investor Edward Bramson ramps ahead of the lender’s AGM next week.

Barclays share price edged lower on Friday after it recorded Q1 profit of £1.5 billion, down from £1.7 billion in the same period a year prior, with the bank’s performance falling in line with analysts’ expectations amid challenging market conditions.

The news will pile further pressure on Barclays management team, which has had to face calls from activist investor Edward Bramson to wind down its investment banking unit, arguing that it is weighing down the bank’s share price.

During an analyst and investor conference call, Barclays Group CEO Jes Staley said that he and the rest of the management team were aware of the execution challenges the bank must meet to deliver acceptable returns on a consistent basis, particularly in the corporate and investment banking unit.

Barclays results: key figures

Barclays profits before tax were £1.5bn, with positive jaws driven by a 3% reduction in costs, excluding litigation and conduct, versus a 2% reduction in revenues.

Meanwhile, its UK business saw strong return on tangible equity (RoTE) of 16.4%, excluding litigation and conduct - an improvement on an increased equity base compared to Q1 of 2018, which included a 12% increase in business banking income, Staley said.

‘Our corporate and investment bank achieved a RoTE of 9.5%, compared to 13.2% in Q1 of 2018. From a revenue perspective, we had a weak quarter in investment banking fees,’ he said.

‘Barclays first quarter of this year is a good step towards our objective of delivering a RoTE of greater than 9% in 2019 and greater than 10% in 2020,’ he added.

Bramson seeks board seat at Barclays AGM

Staley and the rest of Barclays management team is set for a showdown with activist investor Bramson at the bank’s annual general meeting (AGM) next week.

Bramson is hoping that his plans to wind down Barclays investment bank, which he argues is weighing down the lender’s share price, will garner enough support from shareholders to get him a seat on the board of directors.

However, Staley continues to fight back against Bramson’s plans, arguing that the investment bank unit has performed well considering the myriad of macroeconomic headwinds that it has faced in recent years.

‘This is the sixth quarter in a row in the markets business that we’ve gained market share against the US banks,’ Staley told Yahoo Finance UK.

‘Those who argue that we’re structurally disadvantaged versus the US banks — if our structural disadvantage leads to 6 quarters of growth, maybe we should keep it.’

Staley went on to say that Barclays markets business that sits within the investment banking division generated more profit than the overall investment bank.

‘As we seek to improve the overall profitability of the business, if I’ve got a markets business which is gaining market share and generating higher than the bank’s overall level of profitability — that’s a good thing,’ Staley said.

‘We like the progress we’re making in the corporate and investment bank, we like the profitability of our markets business in the first quarter, and we’re going to continue with the strategy we set out three years ago,’ he added.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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