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LONDON — First-quarter net profit at Barclays PLC rose 12 percent from a year ago as investment banking profits surged from the acquisition of U.S. assets of bankrupt Lehman Brothers, though the bank posted a steep 79 percent increase in writeoffs on bad investments due to the financial crisis.
First-quarter profit of 826 million pounds ($1.25 billion) compared to 736 million pounds in the first three months of 2008. Revenue rose 42 percent to 8.15 billion pounds.
Barclays shares rose 2 percent to 293.75 pence on the London Stock Exchange, but some questioned whether the strong performance from the quarter would continue.
"Overall, we haven't seen much to change our views that the strong first-quarter trading performance will prove unsustainable, leaving Barclays and the rest of the banks vulnerable to further rises in impairments," said Sandy Chen, analyst at Panmure Gordon & Co.
Impairment charges and other credit provisions rose to 2.3 billion pounds compared to 1.3 billion pounds a year earlier, a rise it said was in line with expectations.
"During the rest of the year, we expect the loan loss rate to increase further across all business lines and the rate of increase across our international books to be higher than our U.K. books," it added.
Pretax profit from investment banking was up 189 percent to 1.05 billion, reflecting the Lehman Brothers acquisition. However, that purchase was also a major factor in driving operating expenses up 37 percent to 4.46 billion pounds.
Pretax profit from retail and commercial banking fell 45 percent to 586 million pounds.
Trading in April was in line with February and March, following an "exceptional" January, the bank said.
Barclays has turned to private investors in the Middle East to shore up its capital position rather than take on the government as a shareholder, as competitors Lloyds Group and Royal Bank of Scotland were forced to do.
Barclays also decided, after passing a "stress test" of its assets by regulators, not to participate in the government's Asset Protection Scheme to underwrite potential losses on toxic assets.
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On the Net: http://group.barclays.com
