Barclays third-quarter profits fall short of analyst expectations

Barclays has reported that its profits rose by nearly a third in the September quarter – but they still fell short of expectations.

Profit before tax rose to £1.1bn ($1.5bn) between July and September from £837m in the same period a year ago, compared to analysts' estimates for a profit of £1.4bn.

Barclays blamed the less-than-expected profits on a weak trading performance in its investment banking division.

Its share price opened 4% lower in London on the news.

Chief executive Jes Staley said the third quarter was significant as it was "the first for many years in which we have not been in some state of restructuring".

"The completion of our restructuring, and the strength of our capital base today... means we can now turn our full attention towards what matters most to our shareholders: improving group returns," he said.

The rise in profits in the third quarter was driven by a sharp contraction in operating expenses, while income declined slightly.

For the first nine months of the year, group profits advanced 19% to £3.4bn, primarily reflecting lower litigation and conduct costs.

"The third quarter was clearly a difficult one for our markets business," Staley said. "A lack of volume and volatility in FICC (fixed incomes, currencies and commodities) hit markets revenues hard across the industry, and we were no exception to this trend.

"We did however see an improvement in profitability in Barclays UK, and a good underlying return from our consumer, cards and payments business, which partially offset the under-performance in markets."

Barclays also announced plans to ring-fence its retail operations from the more volatile investment arm to meet new UK government regulations, which are aimed at strengthening the financial system and prevent a repeat of the 2008 financial crisis.

It said it would accomplish this by setting up a ring-fenced Barclays Bank UK plc, which will be separate from Barclays plc.

"The two entities will operate alongside, but independently from, one another as part of the Barclays Group under Barclays plc," a statement released by the bank said.