Barclays shares fall on investment banking woes

Shares in Barclays tumbled after poor trading at its investment banking arm overshadowed a rise in third-quarter profit.

The lender said pre-tax profit rose from £837 million to £1.1 billion, with boss Jes Staley describing the period as "particularly significant".

However, income at the bank's markets division fell 14% to £3.5 billion because of "lower market volatility".

Macro income, which comprises fixed income, currencies and commodities, fell 27% to £1.3 billion.

Mr Staley said: "The third quarter was clearly a difficult one for our markets business within Barclays International.

"A lack of volume and volatility in fixed income, currencies and commodities hit markets revenues hard across the industry, and we were no exception to this trend."

Shares slumped more than 6% in morning trading to 185.8p as investors digested the update.

In better news, Barclays' third-quarter results were buoyed by the absence of a payment protection insurance (PPI) provision.

The first half of the year saw Barclays put £700 million aside to cover costs relating to the scandal, which has engulfed the banking sector.

The group's total PPI bill stands at £9.1 billion.

Net operating income came in at £4.46 billion in the quarter, versus £4.65 billion in the same period last year.

Mr Staley added: "The third quarter of 2017 was particularly significant for Barclays as it was the first for many years in which we have not been in some state of restructuring.

"We did however see an improvement in profitability in Barclays UK, and a good underlying return from our consumer, cards and payments business, which partially offset the under-performance in markets."

Mr Staley has been overseeing an asset disposal programme that has seen Barclays offload non-core businesses in a bid to focus on core UK and US operations.

The group has shed 60,000 jobs as part of the shake-up, which the chief executive said will allow Barclays to "focus on generating profitability".

He also brushed aside industry fears of a consumer debt boom in the UK, saying it is "not raising any significant alarm" at the bank, although he admitted Barclays is "keeping an eye" on it.

Group profit before tax for the first nine months of the year was up 19% to £3.4 billion.

Barclays also said it is proposing a restructure to help it meet regulatory rules which demand that all British banks with more than £25 billion of UK deposits section off their retail operations from their riskier investment banks by 2019.

The lender plans to set up a separate entity, Barclays Bank UK, to comply with the requirement.

Ring-fencing aims to avoid a repeat of 2008, when everyday people's deposits were put at risk and the Government was forced to bail out lenders left stricken by the collapse of the sub-prime mortgage market.

Mr Staley himself has also come under fire this year after attempting to identify a whistleblower at Barclays.

The Financial Conduct Authority and the Prudential Regulation Authority are investigating the American's conduct relating to the incident.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: "Litigation still remains a risk for Barclays, with more than 20 separate investigations ongoing, not least one relating to CEO Jes Staley's attempt to uncover a whisteblower in his own ranks."