• Wednesday, May 29, 2024

Business

Barclays logs lower profit as mortgage lending weakens

Barclays net profit slid 13 per cent in the first quarter over weaker mortgage lending and sliding customer deposits. (Photo by TOLGA AKMEN/AFP via Getty Images)

By: Shajil Kumar

Barclays on Thursday said net profit slid 13 per cent in the first quarter, as warning lights flashed over weaker mortgage lending and sliding customer deposits.

Profit after tax dropped to £1.6 billion in the first three months of 2024, compared with £1.8 billion in the same period one year earlier, Barclays said in a results statement that also revealed lower income for its investment banking division.

Pre-tax profit fell 12 percent to £2.3 billion, but this beat market expectations of £2.2 billion.

UK operations were hit by “subdued mortgage lending” as a result of weaker market demand.

Deposits declined on increased competition for savings accounts, as the Bank of England held its interest rate at a 16-year high of 5.25 per cent despite slowing inflation.

Retail banks tend to mirror BoE action in their own loans and savings products. The central bank is widely tipped to start cutting rates this year.

Barclays added Thursday that its investment bank division, which accounts for about half of group revenues, posted a seven-per cent drop in income.

Investors took the earnings in their stride, sending Barclays’ share price up 4.2 per cent at 199.04 pence.

“Barclays has shown stable rather than dynamic growth over the quarter, beating expectations on most measures,” noted Richard Hunter, head of markets at trading firm Interactive Investor.

He added, however, that “the performance of Barclays Investment Bank could lead to some investor disappointment” following recent strong numbers from US rivals Goldman Sachs and Morgan Stanley. (AFP)

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