Barclays (BARC.L) has revealed a drop in pre-tax profits during the first quarter of 2011 to £1.7 billion, compared with £1.8 billion during the prior-year period.

Bob Diamond, chief executive of Barclays, said the bank had made a good start to 2011, despite the ‘challenging external environment’. He said profits in the first quarter had allowed the bank to strengthen its regulatory Core Tier I capital.

The bank reported a 21 per cent rise in pre-tax profits in its retail and business banking segments to £692 million, from £570 million in the prior-year period.

The retail and business banking results were driven by reducing impairment charges and growth in mortgage balances. Its wealth and investment management segment saw a decline in pre-tax profits to £70 million from £74 million.

The bank reported higher investment costs in its Barclays Wealth segment, rising to £17 million. Pre-tax profit from its investment management - principally dividend income from its holding in BlackRock - was £24 million, falling from £29 million in 2010.

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