Barclays sets out case against Bramson as profits inch up

Barclays began to set out its case against activist investor Edward Bramson by promising to return more cash to shareholders and highlighting the virtues of its diverse business.

Reporting a 1% increase in underlying profit, chief executive Jes Staley said the results were supported by improved performance at Barclays investment bank. Bramson, whose Sherborne Investors revealed a 5.2% stake in Barclays in March, is reported to favour stripping the investment bank back to release capital.

Staley said: “This has been a significant quarter for Barclays, one in which we have shown that our new operating model and our portfolio of diversified, profitable businesses are capable of producing improved returns for shareholders.

“We look forward to returning an increasing amount of capital to shareholders, both through the annual dividend, and via other means of return, such as buybacks.”

Pre-tax profit for the three months to the end of March, excluding litigation and conduct items, rose to £1.73bn from £1.71bn a year earlier. Revenue fell 8% to £5.36bn. Barclays swung to a reported pre-tax loss of £236m from a profit of £1.68bn as it paid out £1.96bn in litigation and conduct charges.

The bank settled a long-running case with the US Department of Justice in March, agreeing to pay £1.4bn related to its sale of mortgage-backed securities before the financial crisis. That payout and £400m to compensate customers sold payment protection insurance made up the bulk of the conduct charges.

Pre-tax profit at Barclays’ UK business slumped to £170m from £708m, driven mainly by the PPI charge. Profit at the corporate and investment bank rose to £1.18bn from £790m.

Staley said: “Demonstrating the benefits of diversification, lower revenues in our UK businesses, driven by one-offs, were offset by a stronger performance in Barclays International, particularly in the corporate and investment bank.”

Barclays unveiled its results after Bramson increased his holding to 5.4% with the bank's annual general meeting looming on 1 May. The activist, who works aggressively behind the scenes to get changes he wants, has met Barclays investor relations team but has not discussed his plans with Staley yet.

Bramson, based in New York, is reported to have told other Barclays investors he wants the bank to wind down or sell the investment bank's trading operation and for surplus capital to be paid out to shareholders. Staley’s stated strategy is to improve the performance of the investment bank.