Barclays plc (LON BARC) said on Friday it performed better-than-expected in the first quarter as impairment charges posted a sharp decline.
Barclays shares tanked just under 5% in premarket trading on Friday. Including the price action, the stock is now exchanging hands at 178 pence per share. In comparison, it had started the year at a per-share price of 144 pence after recovering from a low of 80 pence per share in the first week of April 2020.
Barclays impairment charges slide sharply to £55 million
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Barclays reported £2.40 billion of pre-tax profit in Q1. In the same quarter last year, its pre-tax profit was capped at a lower £656.31 million. Analysts, on the other hand, had called for £1.27 billion of pre-tax profit for the investment bank in the recent quarter.
The British multinational valued impairment charges in the first quarter at £55 million, compared to a significantly higher £1.52 billion last year. Experts had forecast £361.58 million of provisions instead.
As per Barclays, its net profit in Q1 stood at £1.22 billion versus the year-ago figure of £434.90 million. Net interest income tanked 21% in Q1, resulting in a 6% hit to quarterly revenue. In its earlier report published in February, Barclays recorded a 38% decline in net profit in 2020.
Barclays reiterated its guidance for the medium-term on Friday. The financial services company forecasts higher costs for this year but significantly lower impairment charges. Impairment provision level, it added, was also likely to reduce.
Barclays accrued 0.75 pence per share of an ordinary dividend
The London-listed company accrued 0.75 pence per share of an ordinary dividend in Q1. It, however, recommended that investors don’t translate it as guidance for capital distribution in the future.
Interactive Investor’s Richard Hunter commented on Barclay’s financial update on Friday and said:
“In terms of actual trading, income fell, and costs rose, with the inevitable effect of a worsening cost/income ratio, up to 61 per cent from 52 per cent the previous year. These factors have led to some investor disappointment in early trade.”
Barclays report comes a day after peer NatWest also published market-beating quarterly results.
Barclays performed fairly downbeat in the stock market last year with an annual decline of close to 20%. At the time of writing, the London-headquartered firm has a market cap of £30.29 billion and has a price to earnings ratio of 20.63.