LONDON (Reuters) - Barclays (BARC.L) posted a 22 percent rise in first-quarter profit, ahead of market forecasts, as a strong rebound in revenue from its investment banking arm and a drop in bad debt countered increased compensation for insurance mis-selling.
The British bank reported an adjusted pretax profit of 2.45 billion pounds ($3.94 billion) in the three months to end-March, up from 2 billion a year ago and above the average forecast of 2 billion pounds from a poll of analysts supplied by the company.
“Barclays first quarter results are an encouraging start to the year and demonstrate continued progress across our execution priorities,” Chief Executive Bob Diamond said in a statement on Thursday.
But the bank made a statutory pretax loss of 475 million pounds, compared with a 1.655 billion profit the year before, including a 2.6 billion pound accounting loss on the value of its own debt and an extra 300 million pound charge to cover for mis-selling of payment protection insurance (PPI).
Losses on bad debts dipped to 778 million pounds in the first quarter, down 16 percent on a year ago.
Top-line income at Barclays Capital, the investment bank business that provides the bulk of the bank’s profit, rose to 3.46 billion pounds, up 3 percent from the fourth quarter. That marked a 91 percent jump from the weak fourth quarter of 2011 and was above the consensus forecast of 3.36 billion pounds.
BarCap, along with other investment banks, endured a miserable end to 2011 when a slump in bond trading income due to the euro zone debt crisis had led it to endure its worst quarter for three years.
Barclays said its adjusted return on average shareholders’ equity had risen to 12.2 percent in the first quarter, from 10.2 percent in the same quarter the year before.
In February, it pushed back a return on equity target of 13 percent.
The bank said its Core Tier 1 ration remained strong at 10.9 percent, compared with 11 percent at the end of 2011.
($1 = 0.6206 British pounds)
Reporting by Matt Scuffham; Editing by Steve Slater