Barclays has today warned of growing pressure on its UK business and missed forecasts for its investment bank as a global corporate dealmaking slump persists, sending its shares down despite announcing a bigger share buyback.
The British bank reported first-half pretax profit of £4.6 billion.
This was in line with the average analyst forecast of £4.5 billion, and higher than the £3.7 billion the same time a year ago.
Its also announced a share buyback of £750m for the second quarter, more generous than the £575m average of analysts' forecasts as compiled by the bank.
"The £750m buyback is the silver-lining in what was a modestly disappointing quarter for revenue with only the UK in-line," Jefferies said in a note.
They suggested that Barclays' lowered guidance on margins in Britain raised questions about its future performance.
The bank said its net interest margin (NIM) - a key measure of profitability - in the UK would now likely dip by the end of the year below its half-year level of 3.2%, compared with previous guidance of above that level, and would likely come in at 3.15%.
Banking analysts at JPMorgan said they expected small downgrades for Barclays' future performance, partly due to squeezed margins in Britain as competition intensifies and households contend with cost-of-living pressures.
Rising interest rates in Barclays' key markets of the UK and US have boosted income, but they are also squeezing borrowers and increasing the risk of loan defaults.
The bank set aside £896ms in the six-month period for potentially soured loans, more than double the £341m charge the previous year.
Barclays reported a 10% drop in income at its investment bank - missing analyst forecasts - with income from its fixed income, currency and commodities division down by 6% to £2.97 billion and income from its equities unit tumbling 49% to £1.3 billon.
US banking giants such as Goldman Sachs and Citigroup earlier this month reported lacklustre results for investment banking, albeit rival JPMorgan's finance chief Jeremy Barnum said he saw green shoots emerging in areas like stock offerings.
European rivals are also struggling, with Deutsche Bank yesterday reporting investment bank revenues would fall this year instead of staying flat.
Several investors told Reuters this month they wanted Barclays to prioritise returning more capital to shareholders instead of investing it, after the lender completed a £500m buyback in April.