London: Barclays Plc posted a gain in first-quarter profit matching analysts’ estimates, even as it set aside an additional £800 million (Dh4.5 billion, $1.2 billion) provision toward settling allegations it rigged currency benchmarks.

Pretax profit, including restructuring costs, rose to £1.8 billion from £1.7 billion from a year earlier, Barclays said in a statement on Wednesday. That matched the average estimate of six analysts compiled by Bloomberg.

Barclays Chief Executive Officer Antony Jenkins’s efforts to overhaul the bank’s culture and boost earnings have been hampered by £2.1 billion in provisions to cover allegations traders colluded to rig key benchmarks in the foreign-exchange market. The lender dropped out of a settlement in November, missing out on a 30 per cent discount on the British fine, with banks including Citigroup Inc. and UBS Group AG paying a total of about $4.3 billion in fines.

“It makes you wonder why there have been two top ups to the provision but without any external news,” said Mike Trippitt an analyst at Numis Securities Ltd in London with a buy rating on the shares. “It creates a slightly uncomfortable feeling. I’d like to see a conclusion to the currency probe.”

‘No Regrets’

Barclays, Britain’s second-biggest lender by assets, fell 0.6 per cent at 10.18am in London after declining as much as 1.8 per cent. The shares have risen 6.8 per cent this year.

The latest currency provision was double the forecast of Chirantan Barua, an analyst at Sanford C. Bernstein in London.

Still, Finance Director Tushar Morzaria told reporters on a call on Wednesday he has “absolutely no regrets” about not joining the group settlement at the end of last year.

“We firmly believe that was the right choice for the company” and “we are working as hard as we can to expeditiously resolve this matter,” he said, without elaborating. The company is in “fluid, real-time dialogues” with regulators over reaching a settlement, he said.

Barclays also set aside £150 million for wrongly sold payment protection insurance redress in the first quarter, taking its PPI compensation bill to £5.4 billion.

Including provisions, pretax profit fell to £1.3 billion in the first quarter from £1.8 billion a year ago. The firm’s return on equity, a measure of profitability that takes into account how much capital the business uses, was 7.6 per cent, up from 6.5 per cent a year earlier.

Major problem

“We have to remember this bank took £1 billion of litigation and misconduct charges and still grew its capital ratio,” said Joe Dickerson, an analyst at Jefferies International Ltd in London, who has a buy rating on the stock. “The major problem is drag from then non-core unit — it’s imperative that management and the board get behind a quicker non-core rundown.”

As part of his revamp, Jenkins set up a bad bank to dispose of £115 billion of assets including complex derivatives from the lender’s fixed-income, currencies and commodities unit and the European consumer arm.

Barclays cut risk-weighted assets at the non-core business by £10 billion to £65 billion, driven in part by the sale of its Spanish business. The common equity tier 1 ratio, a measure of its high-quality capital, increased to 10.6 per cent from 10.3 per cent at the end of 2014.

Rising costs for fines have added to pressure on Jenkins, 53, to deepen cuts at the investment bank after pledging to eliminate some 7,000 jobs. New Chairman John McFarlane has vowed to reallocate capital and prioritise investment in the most profitable parts of the firm to bolster earnings.

Investment bank

The securities unit, run by Tom King, had a pretax profit of £675 million in the first quarter, up from £491 million. Revenue rose 2 per cent to £2.15 billion, with fees from arranging mergers and securities sales up 7 per cent. The division reported a quarterly return on equity of 9.1 per cent compared with 2.7 per cent in 2014. However, it’s still the least profitable part of the bank.

“As a management team, we’re not slavishly focused growing our top line, we’re much more focused on increasing our profits and our returns” at the investment bank, Morzaria said.

Barclays’s investment bank is trailing global competitors benefiting from increasing volatility and rising equity markets. In the US, Goldman Sachs Group Inc, Morgan Stanley and JPMorgan Chase & Co posted revenue gains of more than 20 per cent in the first quarter. Deutsche Bank AG said on Monday its investment bank boosted revenue 15 per cent.

Under his cost-cutting plan, Jenkins will eliminate some 19,000 jobs across the firm by 2016 and focus on the US and the UK Operating expenses fell 7 per cent to £4.1 billion in the quarter, helped by lower costs for the Transform program. The adjusted cost-income ratio, a measure of profitability, was at 64 per cent, down from 67 per cent.

“It’s a work in progress,” Trippitt said. “Broadly, I’d say they did slightly better than I was going for, with the key areas of the investment bank and non-core deleveraging going in the right direction.”