LONDON - Barclays reported a 25 percent drop in its quarterly pretax profit on Wednesday as the British bank set aside funds to pay for a major overhaul of its operations
The British bank, which announced 3,800 job losses earlier this year as part of the closure of several business units, said its investment banking, wealth management and credit card divisions had continued to generate strong earnings despite renewed uncertainty about the global economy.
Barclays said its pretax profit, adjusted for one-time charges, totaled £1.8 billion ($2.7 billion) during the first three months of the year, compared to £2.4 billion in the same period last year. The first quarter results missed analysts’ estimates.
Including an accounting charge of £251 million on the value of its own debt, Barclays posted a profit of £1.5 billion in the quarter compared to a £525 million loss in the same period in 2012.
The British bank said it had incurred charges that totaled £514 million in the three months of the year connected to its restructuring plans, and expected to spend a further £500 million during the rest of the year as part of the overhaul.
“While there remains much to do to build a stronger and more resilient Barclays, we are completely focused on executing our transform program and are making good early progress,†Antony P. Jenkins, chief executive, said in a statement.
Shares in the British bank fell less than one percent in early morning trading in London on Wednesday.
Barclays has been in flux since it agreed to a $450 million settlement with American and British authorities in June after some of its traders were found to have manipulated key global benchmark rates for financial gain.
The bank’s former chief executive, Robert E. Diamond Jr., stepped down in the aftermath of the rate-rigging scandal, while one of his top lieutenants, Rich Ricci, head of Barclays’ investment bank, resigned last week.
The investment bank continued to generate the bulk of the overall pretax profit. That division benefited from a strong first quarter, as the global equities markets rebounded and there was a series of high-profile deals in the United States. Barclays, for example, is advising Dish Network on its $25.5 billion takeover offer for Sprint Nextel.
Earnings from the firm’s trading, advisory and other investment banking services increased 11 percent, to £1.3 billion, in the first quarter of the year, or roughly 74 percent of Barclays’ combined pretax profit. The unit’s compensation ratio fell to 41 percent in the first quarter, compared to 43 percent in the same period last year.
Pretax earnings from the bank’s retail division during the first quarter totaled £299 million, a 28 percent increase compared to the last period in 2012. The firm’s wealth management unit also reported a 20 percent increase in its pretax profit, to £60 million, over the same period, according to a company statement.
Like other British banks, Barclays has come under increasing pressure from local regulators to increase its capital reserves to protect against financial shocks.
The bank’s core Tier 1 ratio, a measure of the ability to weather financial crises, stood at 8.4 percent in the first quarter, a slight increase compared to the end of last year, based on the accountancy rules known as Basel III.
In a bid to increase its capital position, Barclays announced plans last month to buy back up to $1 billion of its debt in a complex deal to improve its funding reserves. The bank has also sold $1 billion of contingent capital, a financial instrument that offers investors a yearly return, but is wiped out if Barclays’ core Tier 1 ratio falls below a certain limit.
Since becoming chief executive last year, Mr. Jenkins has been faced with the challenge of improving Barclays’ reputation.
The firm has been forced to hand over billions of dollars after it inappropriately sold complex financial products to consumers. Barclays also continues to be under investigation by American and British regulators over payments connected to a group of Qatari investors that provided it a cash infusion during the financial crisis.
In a conference call with reporters on Wednesday, the Barclays’ chief said the bank had not made further provisions connection to the rate-rigging scandal.
Earlier this year, Mr. Jenkins said he would forgo his 2012 bonus - estimated to be worth up to $4.3 million - though he was given deferred share options worth around $8 million last month.
