Barclays has reported a fall in profits for the first quarter of 2024, as the bank’s pre-tax profits slipped to £2.3bn compared to £2.6bn in Q1 last year.

The bank’s entire group income of £7.0bn was down 4% year-on-year, while its UK income decreased by 7%, as a result of “adverse product dynamics” in deposits and mortgage lending, the bank told investors.

Barclays’ results follow a similar pattern to Lloyds’ reported fall in profits yesterday (24 April), with both major banks highlighting lower mortgage lending over Q1 in their figures.

Both also highlighted the sector-wide Bank of England levy in their respective higher business costs, as Barclays reported that its group total operating expenses were £4.2bn, up 2% year-on-year, with the added factor of the £120m impact from the central bank levy scheme.

“We are focused on disciplined execution of the plan that we presented at our investor update on 20 February,” Barclays group chief executive, C. S. Venkatakrishnan, said. “We have now announced the sale of our performing Italian mortgage book and are investing in our higher returning UK consumer businesses, including through the expected completion of the Tesco Bank acquisition in Q4 2024.

“We continue to exercise cost discipline and remain well capitalised with a common equity tier one ratio at the end of the quarter of 13.5%.”

Equity analyst at Hargreaves Lansdown, Matt Britzman, commented that Barclays Q1 trading was “better than expected”, but added that the weaker net interest income guidance for 2024 would be “a little disappointing”.

“In its UK arm, results were very similar to what markets heard from Lloyds yesterday,” Britzman commented. “Structural hedge income is booming as lower-yield instruments are being reinvested at higher rates. That’s helping to offset ongoing weakness from depositors in search of better rates and a mortgage market that’s not as profitable as a few years ago.

“Both those headwinds are expected to ease throughout the year, and with loan default levels actually ticking down at the group level, there’s enough here to whet investors’ appetites.”

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