Barclays Profit Rises to $1.2 Billion But Fixed Income Trading Slumps

LONDON - The British bank Barclays said Wednesday that profit rose to 728 million pounds ($1.2 billion) in the third quarter, but that income in its investment bank declined, driven primarily by a 44 percent drop in its fixed income business.

Barclays also became the latest bank to acknowledge that it had received inquiries from regulators investigating possible manipulation of foreign exchange. Barclays said it was cooperating and 'it is not possible at this stage for Barclays to predict the impact of these investigations.'

A year ago, Barclays reported a loss of £13 million ($20.9 million) as it booked a charge related to its own debt and took a provision related to inappropriate sale of a type of financial protection insurance to its clients.

On a pretax basis, the bank reported on Wednesday a profit of £1.4 billion for the three months ending Sept. 30, down from £1.9 billion a year ago. Analysts surveyed by Reuters had expected a pretax profit of £1.25 billion.

Barclays, along with other banks in recent days, reported a sharp drop in trading revenue as the banks struggled to divine when the United States Federal Reserve would pull back on its bond-buying program designed to stimulate the American economy. Barclays said its investment bank reported a pretax profit of £463 million, down from £988 million in the prior year. The decline was driven primarily by the steep drop in income in its fixed income business to £940 million.

The retail banking business in Britain, the bank's home market, reported a third-quarter pretax profit of £351 million, up from a loss of £192 million in the prior quarter. The bank took a £550 million provision a year ago related to the improper selling of personal protection insurance.

'These results demonstrate the underlying strength of the group, and the benefits of diversity, shown in the good progress made by several of our businesses in the quarter and year to date,' said Antony Jenkins, the Barclays chief executive. 'All of our businesses are well positioned to take advantage of improvements in the global macro environment, as we manage the group through a slow and gradual economic recovery.'

Barclays joins UBS, Deutsche Bank and the Royal Bank of Scotland as the European banks that have acknowledged receiving inquiries from regulators regarding potential manipulation of currency markets.

The probes are another distraction from Barclays, which paid a $450 million penalty last year related to manipulation of the London interbank offered rate, a global interest rate benchmark known as Libor.

For the nine months ended Sept. 30, Barclays posted a profit of £1.81 billion despite £741 million in restructuring charges and the third-quarter decline in its fixed income business. The bank posted a profit of £545 million for the first nine months of 2012.

The bank said its core Tier 1 capital ratio, a measure of a bank's ability to weather financial disturbances, rose to 11.3 percent by the end of the third quarter. The core capital level had been 11.1 percent in the second quarter.

Barclays said it would pay an interim dividend of 1 pence per share on Dec. 13, resulting in a three pence per share dividend year to date.

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