Barclays warned its earnings would be bad, but the reality was even worse

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The numbers: Dire. Pre-tax profit at the group’s investment bank, once its most promising growth driver, plunged by nearly 50% in the first quarter. Other parts of the Barclays group and some accounting maneuvers cushioned the blow, with overall pre-tax profit only marginally lower than the same quarter last year. But investors were spooked by the turmoil at the investment bank, pushing Barclays’ shares down by more than 4% so far today.

The takeaway: We knew that fixed-income trading was going to be weak, given the results at other banks so far, but Barclays managed to miss even these modest expectations. The bank’s debt-trading operation saw revenue fall by more than 40% in the first quarter, a drop twice as steep as those of its closest competitors. Amid rancor over pay and high-profile executive departures, all eyes are on the bank’s “group strategy update” on Thursday (May 8), when analysts expect Barclays to unveil a major overhaul (read: layoffs) at its misfiring investment bank.

What’s interesting: Reversing a string of recent pay hikes, Barclays seems to have decided that enough is enough: compensation at its investment bank was slashed by 20% in the first quarter. But revenue at the unit fell even faster, meaning that pay as a percentage of sales, at 46%, was actually higher than the previous year (41%). These days, Barclays seems like the bank that can’t seem to catch a break.