Barclays shares were weaker on Thursday after the FTSE 100 bank reported lower total income in the second quarter as investment banking activity slowed.
Total income for the second quarter slipped to 6% to £6.4bn as investment banking activity revenue fell 3%. Investors will also be concerned Barclays have revised their net interest margin guidance for the full year to 3.15% from 3.20%.
Net interest margin is a key profitability metric, and the downgrade will be a blow for the bank as global interest rates look set to plateau.
Another big disappointment for investors was the subdued performance in their investment banking unit as deal flow slowed. Barclays’ Corporate and Investment Bank (CIB) income decreased by 3% to £3.2bn, as lower Global Markets and Investment Banking fees outweighed a strong transaction banking performance.
Barclays is setting aside a further £400m in charges for bad debts as the economic backdrop becomes cloudier.
Lower operating costs helped profit before tax rise to £2bn in Q2, up from £1.5bn in the same period a year ago. However, lower costs and a £750m share buyback were not enough to offset concerns about the outlook, and Barclays shares were down 6% at the time of writing on Thursday.