Barclays Boosted by Investment Banking

     LONDON—Barclays BARC.LN -4.39% PLC Wednesday continued to reap the rewards of heavy client volumes in its investment bank, even as new Chief Executive Antony Jenkins faces pressure to make the bank safer by shrinking the unit.
   The U.K. bank posted a 29% rise in third-quarter underlying profit—which strips out one-off items—in the third quarter to £1.73 billion ($2.78 billion). Within the investment bank, revenue was up 17% from a year earlier at £2.63 billion, and underlying profit more than doubled, to £937 million from £388 million.

   However, the bank posted a net loss for the first nine months of the year of £200 million because of previously flagged provisions and charges.

   The bank's retail operations turned in a worse performance, with a £794 million adjusted pretax profit, down from £1.14 billion in the third quarter of 2011. Profit in the U.K. arm fell to £400 million from £494 million.

   Delivering his first set of results since taking over from Bob Diamond in August, Mr. Jenkins said the overall business has good momentum despite recent difficulties that include a series of scandals. He is due in February to deliver the results of a business review that many analysts say could lead to a scaling back in investment banking, though Mr. Jenkins has dismissed the prospect of major changes.

   Banks across the world are exiting capital-heavy business lines and selling assets to prepare for coming international regulations known as Basel III. In one of the most dramatic moves so far, UBS AG UBSN.VX -0.72% on Tuesday said it would cut about 10,000 jobs and make its investment bank much smaller to adapt to tougher regulations.

   U.K. banks face an additional regulatory burden from a banking reform bill that would put costly safeguards around retail banking operations if approved by parliament in a vote next year.
Barclays two weeks ago had said it expected to meet analysts' average profit estimates of about £1.7 billion. At the time, it added £700 million to the £1.3 billion set aside to reimburse customers who bought faulty payment protection insurance on loans and other banking products.

   That provision, and a £1.01 billion charge for the rising value of its own debt, led it to post net losses for the nine months. The bank didn't give a three-month net figure.

   Barclays in June paid $450 million in a settlement with U.S. and U.K. regulators over attempts to manipulate the London interbank offered rate. Mr. Diamond resigned a week later. Barclays and a score of other banks involved in the alleged rate manipulation now face a flurry of lawsuits from customers over the matter.

   Barclays on Monday was accused by a former client of inflating the cost of interest-rate swaps, in a preliminary hearing for a case in London's High Court