The banking group reported a net profit of £1.7 billion for the three months to June, a 34% increase from the same period last year and ahead of analysts’ forecasts. Revenues also climbed 14% to £7.2bn, as the bank continues its three-year plan to reduce its reliance on volatile investment banking and refocus on the UK market.

The primary driver of the profit beat was the trading business, which benefited from market volatility. The fixed income and equity desks generated £1.45bn and £870 million respectively, accounting for more than two-thirds of the investment bank’s revenue.

However, this success masked a downturn in its fee-generating businesses. Revenue from deal advisory, underwriting, and capital markets fell significantly, challenging Barclays’ ambition to boost returns in these areas. Income from advisory work dropped 11%, while its equity capital markets unit saw a one-third decline.

Performance in its core UK business was mixed. While revenues rose 12% to £2.1bn, this was just shy of expectations. Net interest income grew 16%, helped by a hedging programme, but customer deposits fell slightly.

Reflecting its strong capital position, Barclays announced a new £1bn share buyback.

Russ Mould, investment director at AJ Bell, said: “Barclays has turned in a respectable performance with notable growth on the corporate and investment banking side.

“Investors are being treated to a new share buyback programme and a small increase in the dividend.

“On paper, that should have been enough to win over the market, but the shares have slipped on the results. Investors will be disappointed at the lack of upgraded earnings guidance for the full year, particularly as second quarter profit beat expectations.”