Barclays is scaling back lending to risky borrowers after taking a £228m hit from the collapse of mortgage lender Market Financial Solutions (MFS), which failed in February amid fraud allegations. The bank's chief executive, CS Venkatakrishnan, warned of increasing fraud cases and said the bank is constraining lending to certain structured finance counterparties with vulnerable business models.
The charge pushed Barclays' total credit impairment losses to £823m in the first quarter of 2026, up from £643m a year earlier. The bank also set aside an additional £105m for motor finance compensation, bringing its total provision to £430m. Despite these charges, pre-tax profit rose 3% to £2.8bn, with revenues up 6% at £8.2bn.
Venkatakrishnan noted that fraud incidents are likely to increase and stressed the importance of strong financial controls. The losses from MFS, US sub-prime auto lender Tricolor, and US auto parts company First Brands have raised concerns about lending standards in the private credit industry, which regulators describe as opaque.
Barclays' investment banking income topped £4bn for the first time, driven by a 16% rise in equities income amid volatility since the start of the Iran war on 28 February. However, Venkatakrishnan warned that higher energy prices from the conflict could impact the economy.
The bank also announced a 5% cashback offer on fuel at Tesco pumps for debit card holders, up to £10 a month, to help motorists with rising costs. Chief financial officer Anna Cross said businesses remain in good shape, with no credit deterioration, and consumers are prioritising essential spending and repaying credit card debt.
