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Barclays Posts 35% Jump in Profit on Bond-Trading Revenue

  • Fixed-income unit reports highest revenue in more than 2 years
  • Bank books $1.3 billion pension deficit, $734 million PPI cost

Barclays Plc said profit rose 35 percent in the third quarter as revenue from fixed-income trading surged to the highest in more than two years.

Pretax profit climbed to 837 million pounds ($1.02 billion) from 619 million pounds a year earlier, the London-based lender said in a statement Thursday. Excluding one-time items, profit was 1.7 billion pounds, beating the 1.53 billion-pound average estimate of five analysts surveyed by Bloomberg News.

LATEST: Barclays' quarterly profit rises 35% after revenue from fixed-income trading surges

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The results may help Chief Executive Officer Jes Staley convince investors of the advantage of keeping an investment bank even after it posted lower returns than the lender’s other businesses in recent years. Staley has said calls to spin off the unit are “shortsighted” because it serves as a counterweight to the retail divisions, which analysts forecast will be hit by a slowdown in the U.K. economy after the Brexit vote.

Staley Talks to Bloomberg TV


“Barclays’s results are significantly better than expected at the headline level, driven by strong performances by the investment bank division and in non-core,” Raul Sinha, an analyst at JPMorgan Chase & Co., said in a note to clients. “Overall, these results show improving momentum in the restructuring story.”

Damping investor sentiment was the bank’s common equity Tier 1 ratio, a measure of its capital strength, which remained static at 11.6 percent. This was largely because the bank’s pension plan swung to a 1.1 billion-pound deficit from a 800 million-pound surplus, trimming 0.3 percentage points from the key capital ratio. The bank also took a further 600 million-pound provision to compensate customers for improperly...