LONDON (Reuters) – Barclays set aside 2.1 billion pounds ($2.6 billion) to cover a likely spike in loan losses as thousands of its corporate and consumer borrowers battle to cope with the financial fallout from the COVID-19 pandemic.

The British bank booked first-quarter pretax profits of 923 million pounds, down 38% from 1.5 billion pounds in the first quarter of 2019 and shy of the 1.27 billion pounds average of analysts’ forecasts compiled by the bank.

Barclays said the impact of the coronavirus hit late in the first quarter and was likely to linger, striking a less positive tone than Standard Chartered which earlier on Wednesday reported a 12% dip in profit for the period.

“Given the uncertainty around the developing economic downturn and low interest rate environment, 2020 is expected to be challenging,” Chief Executive Jes Staley said, adding that the lender’s “diversification by business, geography and currency” would ensure its resilience going forward.

Barclays said group income rose by 20% to 6.3 billion pounds, boosted by a surge in activity in its transatlantic investment bank where pretax profits leapt by 42% to 1.2 billion pounds.

The fixed income, currencies and commodities division was the investment bank’s strongest performer over the period, generating a 106% rise in income to 1.9 billion pounds as it cashed in on sharp swings in global markets.

Income at its markets business rose by 77% to 2.4 billion pounds, a record quarterly performance likely to undermine a campaign led by Barclays top shareholder Sherborne Investors to radically pare the bank’s investment banking division.

CORONAVIRUS HIT

The impairments number included a 405 million pound hit from single name wholesale loan charges, while charges in its consumer, cards and payments division nearly trebled to 885 million pounds from Dec. 31, as the deteriorating economic situation increased the chances of customers missing payments.

The coronavirus outbreak has hit its credit card business particularly hard, with spending in Britain and the United States in the last week of March just half the volumes seen in the same period a year ago.

Banks like Barclays have been key to UK government efforts to keep British businesses and households afloat during the COVID-19 pandemic by slashing charges, dispensing billions of pounds of state-backed loans and granting debt repayment holidays.

As at April 24, Barclays said it had lent 737 million pounds via the Coronavirus Business Interruption Loan scheme, approved over 238,000 mortgage and loan payment holidays, and waived overdraft and business banking charges for more than 6 million customers.

Despite the tougher economic environment, the bank said it still believed its return on tangible equity target of greater than 10% remained appropriate over time. It delivered a group ROTE of 5.1% over the first quarter, while the investment bank chalked up 12.1%.

($1 = 0.8013 pounds)