Barclays' profits fell 10% in the first quarter, in line with analysts' expectations as tough market conditions caused a drop in earnings at its under-pressure investment bank. 

The UK bank is facing calls from activist investor Edward Bramson to streamline its investment banking business.

It said today that returns in the investment banking unit fell to 9.5% from 13.2% the same time a year ago. 

Barclays' overall profit, which excludes legal and conduct charges, was £1.54 billion, in line with the £1.57 billion forecast compiled from the average estimates of 13 analysts polled by the bank. 

Barclays said that if the tough market conditions persist, it may have to cut annual costs in 2019 below the £13.6-13.9 billion range it earlier said it expected to spend. 

The poor investment banking performance comes at an awkward time for Barclays chief executive Jes Staley, who is locked in a public battle with activist Bramson who wants to see the unit pared back to boost overall group returns. 

Staley last month ousted his lieutenant Tim Throsby, a fellow former JPMorgan banker who he had recruited in September 2016 to run the investment bank and who then embarked on a hiring spree in a bid to restore morale and performance. 

The bank said income from its equities business fell 21% and banking advisory fees were down 17%, although earnings from fixed income, currencies and commodity trading (FICC) rose 4%. 

The drop in equities income follows similar announcements from US rivals such as Goldman Sachs and JPMorgan which saw first quarter declines in trading revenues as client activity slumped. 

The bank's core capital ratio fell to 13% from 13.2% at the end of the previous quarter, and its total income of £5.25 billion fell short of analysts' expectations.