Barclays Warns of Lower First-Quarter Profit

LONDON-- Barclays PLC said Thursday that a continuing slowdown in fixed-income trading would push adjusted first-quarter profit lower than in the same quarter last year.

The caution came in a brief trading update issued before its annual shareholder meeting.

Barclays Chief Executive Antony Jenkins said there had been a significant fall in first-quarter revenue in its fixed-income, currency and commodities business--traditionally the main earnings generator in its investment bank--"reflecting difficult market conditions and a strong comparative performance for Q1 last year." He said equities and investment banking was broadly flat on the first quarter of 2013, and that the fixed-income decline was partially offset by lower costs as the bank sheds jobs and exits some businesses.

Barclays reported GBP1.79 billion ($3 billion) in adjusted profit in the first quarter of 2013, driven by a strong quarter for its investment bank. Its fixed-income, currency and commodities operations generated GBP2.19 billion of revenue in the period. Adjusted pretax profit strips out fluctuations in the value of the bank's own debt and provisions to reimburse customers for mis-sold products.

A sharp slowdown across the industry in fixed income trading started in the second half of last year, though, as bond investors curbed their activity to get ready for rising interest rates.

The bank will report its full first-quarter results on May 6, and present an updated strategy for its investment bank on May 8. Barclays on Tuesday said it is exiting most of its commodities trading businesses after deciding they weren't making enough money and didn't fit its strategy.

Later Thursday, Mr. Jenkins is to tell shareholders how the bank will adapt to tougher economic conditions and regulatory rules that are making parts of its business less profitable. He will also defend the bank's decision to raise bonuses last year at the bank despite a fall in profits.

Write to Margot Patrick at [e-mail]

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