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April 29, 2020, 2:58 a.m. EDT

Barclays profit drops as it braces for bad loans

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By Simon Clark

LONDON -- Barclays PLC said its profit fell in the first quarter as the U.K. bank set aside GBP2.1 billion ($2.6 billion) in provisions for losses from loans affected by the coronavirus pandemic.

Net profit dropped 42% to GBP605 million in the first quarter from the same period last year, Barclays said. Provisions for bad loans in the first quarter of last year totaled GBP448 million.

Banks across the world are increasing provisions to account for the impact of the virus on companies and the economy. HSBC Holdings PLC, Europe's biggest bank by assets, set aside $3 billion in the first quarter. The largest U.S. banks have taken billions of dollars in new credit provisions.

The virus is the latest challenge to banks in Europe, which have been hobbled by low and negative interest rates that have made lending particularly challenging.

"Given the uncertainty around the developing economic downturn and low interest rate environment, 2020 is expected to be challenging," Barclays Chief Executive Jes Staley said.

Write to Simon Clark at simon.clark@wsj.com

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