Barclays Bank investment banking under pressure
Despite the fact that Barclays Bank announced a good set of figures last week there is concern about the reduction in revenue at the company's jewel in the crown, Barclays Capital. This is the investment bank which is run by the Barclay's US president Bob Diamond. So why the drop in revenue at Barclays Capital?
The 26% reduction in underlining income at Barclays Capital was more than many analysts had expected even if profitability was substantially higher due to a reduction in loan impairments. It is believed that the commodities division was the main reason for the fall in income after a fairly strong first quarter in 2009. Even though total pre-tax profits for the overall group were £1.8 billion, with Barclays Capital accounting for £1.47 billion, there is concern that Barclays Bank may struggle to continue growing at the same rate as it has done over the last few months.
It was obvious to all investors and analysts that at some point the UK banking industry would benefit from a reduction in loan impairments which would feed through to the bottom line and give very generous comparisons against the same period last year. Now comes the hard bit, continuing to grow in what are still very difficult markets in the UK.
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