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Barclays chief executive CS Venkatakrishnan called for a renewal of equity risk culture in the UK to stimulate markets, as the bank reported better than expected first-quarter earnings.
Profits fell 13 per cent from the same period a year earlier to £1.6bn, after weakness in the bank’s domestic business and its investment bank drove a 4 per cent decline in group revenues to £7bn.
Barclays’ results were nonetheless better than analysts had expected, sending shares up more than 4 per cent in morning trading. Citigroup analyst Andrew Coombs said the lender had delivered “a solid set of results, which should be well received”.
Venkatakrishnan said he believed there should be more initial public offerings in London. “I would like to see a revival and renewal of equity risk culture in the UK,” he said.
“Lots has to happen to rebuild that [IPO] ecosystem. It is people buying stocks, it’s institutions buying stocks, it is some aspects of the listing rules.”
Banks needed to invest in stimulating British business, he added, by providing financing for early-stage companies to help them grow and eventually list. “Ultimately, this will be good for the UK and London,” he said.
The UK market for IPOs has so far failed to take off this year, in contrast to mainland Europe and the US where there is a nascent rebound following a two-year hiatus in listings.
That has been a cause for concern for British brokers and investment bankers, as politicians have sought to loosen the UK’s regulatory regime to revive the City of London and reverse the erosion of its global status as a financial centre.
Barclays also struggled to capture the resurgence in global dealmaking, with its advisory business down almost a third from last year, and revenues across investment banking and trading down 7 per cent to £3.3bn.
Barclays’ equities trading business was a bright spot in the division, with revenues up 25 per cent to £883mn. In fixed income, currencies and commodities trading, income dropped 21 per cent to £1.4bn, even as German rival Deutsche Bank on Thursday posted its best quarterly results in 11 years in part due to better than expected FICC trading.
“In global markets, we did not capture market opportunities as much as our competitors did,” Venkatakrishnan said.
In its domestic business, Barclays said earnings had been hit by UK savers switching to higher-yielding accounts, while it faced pressure on mortgage margins amid fierce competition between lenders. Revenues in Barclays’ UK division fell 7 per cent to £1.8bn, while net interest income dropped 4 per cent to £1.5bn.
The bank reported a return on tangible equity — a key measure of bank profitability — of 12.3 per cent, down from 15 per cent last year but ahead of its target of more than 10 per cent for 2024. Group operating costs fell 3 per cent, driven by £200mn of efficiency savings.
In February, Barclays said it had cut its annual bonus pool by 3 per cent after a tough year for its investment bank in 2023, while the bank has also embarked on a programme of job cuts, particularly in its back office.
“There is no big slip-up here, with early signs of progress on costs in particular,” said Numis analyst Jonathan Pierce.
Venkatakrishnan skirted a question on pay for Barclays’ investment bankers, after the UK government decided to lift a cap on bonuses introduced when Britain was still a member of the EU.
A decision on how to reward Barclays’ bankers would not be taken until after shareholders voted on a resolution at Barclays’ annual general meeting in May, the chief executive said.
