Barclays’ profits hit by fall in investment banking fees

Barclays’ profits fell 4 per cent in the fourth quarter as a plunge in fee income at its investment bank offset a strong performance at its consumer lending business, which was boosted by rising interest rates.

Net income decreased to £1.04bn from £1.08bn in the same period last year, beating analysts’ expectations of £919mn, the British bank said on Wednesday. Revenue rose 12 per cent to £5.8bn, but this was below the average £6.1bn estimate.

Barclays UK, its ringfenced consumer lender, posted profits 13 per cent higher than in the same period in 2021. That was driven by an increase in revenue from personal and business banking as the Bank of England raised rates, which this month hit a 15-year high of 4 per cent.

At the investment bank, fixed-income trading surged 79 per cent, but this failed to offset a 50 per cent plunge in advisory and capital markets fees, matching trends seen in the quarter on Wall Street. As a result, revenue at the division fell 2 per cent to £2.6bn.

The bank also added £500mn of credit impairment charges in the quarter, which it said reflected “the deteriorating macroeconomic forecast”.

For the full year, net income fell 19 per cent to £5bn in 2022, just above analysts’ expectations of £4.9bn.

The decline reflected an embarrassing trading error that led to the bank accidentally selling $17.7bn of structured financial products it did not have authorisation for. It had to pay $361mn to the US Securities and Exchange Commission and set aside £450mn to compensate investors.

Revenue rose 14 per cent to £24.9bn, slightly lower than the £25.2bn estimated by analysts. The bank made a return on tangible equity — a key profitability metric — of 10.4 per cent for the year, down from 13.1 per cent in 2021.

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