Major bank slapped with £228million hit after mortgage lender collapse

Revenues rose to £8.2billion from £7.7billion in the same period last year.

The results were impacted by a £228million loss tied to the failure of Market Financial Solutions, which entered administration in February following fraud allegations.

The collapse came less than half a year after failures at First Brands Group and Tricolor Holdings in the United States, raising concerns about underwriting standards in asset-backed lending.

Barclays had previously disclosed a £110million loss linked to its exposure to subprime lender Tricolor in October.

Chief executive CS Venkatakrishnan described the quarter as "solid" as the bank announced a £500million share buyback programme.

He said: "This fraud, as with the one in Tricolor, indicates to us the importance of strong financial controls of borrowers, and the difficulty of identifying fraud."

He said the bank would stop extending credit to structured finance counterparties unable to demonstrate robust financial oversight.

"In those cases, but especially if they're more niche players operating in parts of the market which are more cyclically vulnerable and where we cannot be fully convinced of the quality of their controls, we are restricting lending."

He said the tighter lending criteria were not materially affecting operations but were intended to reflect the bank’s approach to current market conditions.

The losses linked to Market Financial Solutions contributed to credit impairment charges of £823million for the quarter, an increase of more than 25 per cent compared with the same period in 2025.

Barclays’ investment banking division delivered a more subdued performance, with revenues rising four per cent year-on-year to £4billion.

The unit did not benefit from the fixed income trading gains reported by several US rivals.

Barclays does not operate a commodities trading desk, limiting its exposure to one of the most active trading areas since the Iran conflict began in February.

Trading income fell two per cent, although net interest income within the division increased 29 per cent.

Advisory revenues rose 78 per cent and equity capital markets income increased 31 per cent.

Return on tangible equity declined to 13.5 per cent from 14 per cent a year earlier.

The Barclay's boss said the bank remained alert to inflationary pressures linked to the energy crisis associated with the Iran conflict.

Mr Venkatakrishnan said: "The higher oil prices and the longer it goes on will have an impact on the economy," adding that while credit weakness had not yet emerged, UK inflation had risen.

Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: "There's nothing transformational here, but the direction of travel remains positive, supported by improving efficiency and a strong capital return profile."

He said the results represented "a quietly reassuring update that keeps the longer-term investment case intact, even if Wall Street continues to set the pace."