A pick-up at the investment bank helped Barclays’ second-quarter profits pop by 44%

Barclays CEO Jes Staley.

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Barclays CEO Jes Staley.
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REUTERS/Yuri Gripas

  • Barclays Q2 pre-tax profits rise 44%, while income climbs 10%.
  • The bank had a strong performance at its investment bank and also benefitted from lower impairment costs.

LONDON – Barclays reported a strong set of second-quarter results on Thursday, including solid numbers from its under-fire investment banking unit.

Here are the top-line numbers from Barclays results for the three months to June:

  • Income: Up 10% to £5.6 billion
  • Pre-tax profit: Up 44% to £2 billion
  • Costs: Down 3% to £3.3 billion
  • Return on equity: 12.3%

The return of volatility this year helped markets income at Barclays’ investment bank increase by 11%, with a big uptick in derivatives and equity financing. The results will buoy the bank’s management which is facing pressure from activist investor Edward Bramson over the investment banking unit.

Bramson wants to shut almost all trading activity at Barclays’ investment bank as part of plans to cut costs and boost returns. Barclays’ trading income rose 13% in the first half of the year to £2.5 billion.

Laith Khalaf, a senior analyst at stockbroker Hargreaves Lansdown, said: “The positive performance of the investment bank will help to fend off the advances of activist investor Edward Bramson, who has taken a 5% stake in Barclays and reportedly wants to slim down the division.

“However it’s been achieved against a backdrop of good times across the US investment banking sector, and anyone can make hay when the sun is shining.”

The group’s second-quarter performance was helped by a big decline in conduct and litigation costs in the quarter, down to £81 million from £715 million a year earlier.

CEO Jes Staley said in the accompanying half-year report: “The second quarter, where we generated a Group RoTE of 12.3%, underlines the growing pace of delivery at Barclays. This is a business which is performing well, having addressed the challenges of the last decade.”

Pre-tax profit across the first-half of 2018 fell by 28% to £1.6 billion, mostly due to conduct and litigation costs. When these are excluded, profit rose 20% to £3.7 billion.

Jefferies analyst Joseph Dickerson and his team said in a note: “Q2 results show a much better impairment performance and solid delivery across business segments. We see consensus drifting higher despite a mixed cost guide.”

Despite the strong performance, Barclays shares are trading down 0.3% after just over half an hour of trade on the London Stock Exchange.