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Barclays has revealed it set aside more than £800 million for bad debts related to the collapse of a mortgage lender and as it builds a buffer amid geopolitical turmoil despite reporting an uptick in earnings for the first quarter.

The £823 million provision for loans expected to turn sour was increased from £643 million a year ago.

The banking group’s impairment charge was largely driven by a one-off loss surrounding a single company affecting its investment banking operations.

It is understood that this refers to the collapse of UK property lender Market Financial Solutions (MFS) earlier this year amid allegations of fraud.

Group chief executive CS Venkatakrishnan, known within the bank as Venkat, said he was “disappointed” by the hit which related to a “well-publicised sophisticated fraud”.

“This fraud, as with the one in Tricolor, indicates to us the importance of strong financial controls of borrowers, and the difficulty of identifying fraud,” he said.

“As such, we are constraining lending to certain structured finance counterparties who operate more vulnerable business models and cannot convince us of the quality and independence of their financial controls.”

The bank suffered a separate impairment last year linked to the collapse of US subprime lender Tricolor.

Venkat stressed that efforts to restrict lending to more risky borrowers were not having any significant impact on the business but that he wanted to “give our investors a sense of how we’re thinking about the environment”.

Meanwhile, Barclays also warned that “geopolitical uncertainty persists” which was reflected in the latest buffer.

Venkat said the bank was “vigilant about the inflationary impact of the rising energy crisis” linked to the war in Iran.

He added: “The higher oil prices and the longer it goes on will have an impact on the economy.

“We do care – we’ve not seen anything particularly yet in terms of credit weakness, but what we’ve seen is that the inflation print in the UK has gone up.”

Nevertheless, Barclays reported a pre-tax profit of £2.8 billion for the first quarter of 2026, up 3% on the same period last year.

This was driven by a 6% jump in income, with its UK bank, corporate division and investment bank all making more money, as well as its US consumer bank.

UK lending increased by 5% year-on-year and card balances jumped by 8%.