British bank Barclays Plc said first-quarter profit rose 15 percent as strong growth at its investment banking arm made up for a big jump in bad debts as economies worsen, sending its shares to a seven-month high.
Trading in April had been generally consistent with the overall trend for February and March after an exceptional January, Britain's third biggest bank said Thursday.
Barclays made a January-March pretax profit of 1.37 billion pounds ($2.1 billion). Profit at Barclays Capital jumped 361 percent to 907 million pounds, driven by growth in the United States after the acquisition of Lehman Brothers' U.S. operations last year.
The results echoed the strong start to the year by rivals, including Goldman Sachs, Credit Suisse and BNP Paribas, as banks have benefited from a revival in capital markets activity after the torrid end to 2008, with many grabbing business where troubled rivals have retreated.
The results implied Barclays' quarterly profit excluding writedowns was near 2.5 billion pounds, said Jonathan Pierce, analyst at Credit Suisse.
We suspect this is by far and away the best quarter Barclays has ever had, he said.
Pierce said that the performance of Barclays Capital should drive up profit forecasts and that he expected to double his 2010 pretax forecast to about 5 billion pounds.
By 0730 GMT, Barclays shares were up 5.2 percent at 303 pence, their highest level since October and outpacing a 2.8 percent rise by the European banking sector. Barclays shares have more than quadrupled in the past two months.
BAD DEBTS JUMP
Barclays said impairment charges and other credit provisions jumped to 2.31 billion pounds from 1.29 billion. About half of that rise was due to growth and currency movements, and half was due to a worsening economy and maturation of loans.
The bank said the loan loss rate would likely increase across all its business lines and it was assuming its 2009 annualized loan loss rate would be at the upper end of its indicated range of 1.3 to 1.5 percent. The annualized rate was 1.31 percent in the first quarter.
Net losses from credit market writedowns more than doubled during the quarter to 2.15 billion pounds. Gross writedowns hit 2.61 billion pounds, before hedges and gains on its own debt.
Banks across Europe and the United States have been battered for more than two years by the financial crisis, and now face rising losses as home and corporate loans sour.
However, Barclays and other bank stocks have soared in recent weeks as a recovery in capital markets has lifted optimism that they could be through the worst and can avoid more dilutive fundraisings.
($1 = 0.6607 pound)
(Editing by Dan Lalor and Karen Foster)