Barclays’ profit almost tripled in the first quarter of 2021 compared to the same time period in 2020, delivering a huge beat to analysts’ expectations, the bank reported on Friday.
The bank’s loan-loss reserves, which it bulked up during the worst of the COVID-19 pandemic, dropped sharply and its investment bank performed strongly as the global economy started to recover from the pandemic.
Profits rose to £1.7 billion ($2.37 billion) in the first three months of this year, compared with £605 million ($841 million) in the same quarter last year, marking an increase of over 180%. This performance exceeded analyst expectations for a result just below £1.2 billion ($1.7 billion).
Total group income fell by 6% to £5.9 billion ($8.2 billion), but beat the predicted £5.6 billion ($7.8 billion). The revenue drop was the product of falling interest rates and lower returns from loans in the UK, as well as a decline in card spending and balances globally, the bank said.
However, strong UK mortgage performance, where home sales rose sharply over the first three months of the year, and a decline of revenue generation of just 1% in the international corporate investment bank helped offset the broader fall. Equities and banking especially performed well and grew by 65% and 35% respectively.
Low demand for unsecured lending and continuously low interest rates are expected to cause headwinds for Barclays throughout 2021 despite the yield curve steepening, the bank’s report said.
“As we enter the next phase of this pandemic, we remain resolute in our commitment to support the economic recovery. From our spend data, which captures UK economic activity across our cards and acquiring businesses, we are already seeing encouraging early signs of recovery in some sectors, including those hit hardest by the crisis” James Staley, group chief executive officer, said, showing himself cautiously optimistic.
“While evidence of recovery is encouraging, we have continued to take a cautious view of the impact of the pandemic