A Barclays Bank branch is seen in London, Britain, on February 23, 2022.
Peter Nicholls | Reuters
LONDON — barclays said on Thursday that it had suspended its planned share buyback program due to a costly trading mistake in the US.
It comes as it reported earnings that beat expectations for the first quarter as strong investment banking performance helped fuel revenue growth.
The British bank announced last month that it had sold $15.2 billion more in US investment products, known as “structured notes,” than was allowed. Barclays said on Thursday it had postponed its share buyback program indefinitely and set aside a £540 million provision as a result of the issue, which is currently being investigated by US regulators. The bank had originally said it expected a £450m hit.
“Barclays believes it is prudent to delay the start of the buyback program until such discussions [with the SEC] have been completed,” the bank said in its earnings report on Thursday.
“Barclays remains committed to the share buyback program and the intention would be to launch it as soon as possible after resolution of the SEC filing requirements is met and the appropriate 20-F filings have been made.”
Barclays reported first-quarter net profit attributable to shareholders of £1.4bn ($1.76bn), above analysts’ expectations of £644m, according to Refinitiv data. It marks an 18% decline from the first quarter of 2021, when net profit was £1.7bn.
Group revenue rose 10% year-on-year to £6.5bn, buoyed by strong corporate and investment banking earnings during a peak of market volatility.
“Our revenue growth was driven in part by Global Markets, which has been helping clients navigate ongoing market volatility caused by geopolitical and economic challenges, including the devastating war in Ukraine, and by the impact of interest rates. higher interest rates in the US and UK,” CS CEO Venkatakrishnan said in a statement accompanying the results.
Other highlights of the quarter:
- Total operating expenses increased to £4.11 billion, up from £3.58 billion in the first quarter of 2021, due to increased litigation and conduct charges stemming from the US trade error.
- The CET1 index, a measure of banking solvency, stood at 13.8%, compared to 15.1% in the last quarter of 2021.
- Return on tangible equity was 11.5%, down from 14.7% in the same quarter last year, and the bank said it will continue to target a RoTE of more than 10%.
The results come after a turbulent end to 2021, with plenty of time CEO Jes Staley resigns in November following an investigation by regulators into his relationship with Jeffrey Epstein. He was replaced by Venkatakrishnan.
Shares are down nearly 22% so far this year amid broader concerns about interest rates, inflation and slowing growth.
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