Barclays Q1 profit up 25 pct, makes new provision

AP News
Posted: Apr 26, 2012 4:25 AM
Barclays Q1 profit up 25 pct, makes new provision

Barclays PLC reported a 25 percent gain in first-quarter net profit on Thursday, beating market forecasts with strong performances in its retail and business banking, and wealth and investment management divisions.

For the three months ending March 31, Barclays reported an adjusted profit after tax of 1.87 billion pounds ($3 billion) after taxes, compared to 1.5 billion pounds a year earlier. Income rose by 5 percent to 8.14 billion pounds.

Those figures excluded an additional provision of 300 million pounds to compensate buyers of payment protection insurance, in addition to 1 billion pounds set aside last year, and a 2.6 billion pounds reversal of a previous accounting gain on own credit.

Barclays shares were up 1.3 percent at 214 pence in early trading in London.

Gary Greenwood, an analyst at Shore Capital, downplayed the loss on own credit as "an accounting aberration," but he cautioned that the additional provision for payment protection insurance "will undoubtedly raise questions around prudence and whether reserves are adequate at the other U.K. banks."

On Friday, the company holds its annual general meeting and CEO Bob Diamond could well face some protests about his pay.

Responding to shareholder pressure, the bank announced last week that a chunk of the bonuses paid out to Diamond and Finance Director Chris Lucas will be determined on certain earnings targets being achieved.

Diamond stands to lose 1.35 million pounds ($2.17 million) and Lucas 900,000 pounds if they miss the target.