Barclays has warned the coronavirus pandemic could cost it some £2.1bn, largely due to customers being unable to repay their loans.
The firm said it was setting the money aside to cover its “initial estimates” of the impact of the virus.
The impairment charge meant its profits for the first three months of 2020 dived 38% to £913m, it said.
On Tuesday rival lender HSBC reported a 50% fall in profits linked to the pandemic.
HSBC had forecast that bad loans would rise to $ 3bn (£2.4bn) due to customers not being able to repay them during the crisis.
‘Developing economic downturn’
Barclays said on Wednesday the impact of the pandemic “came late in what was until that point a good quarter”.
But it said that despite the challenging environment, it was well placed to get through the crisis.
“We have taken a £2.1bn credit impairment charge which reflects our initial estimates of the impact of the Covid-19 pandemic,” said chief executive Jes Staley.
“Given the uncertainty around the developing economic downturn and low interest rate environment, 2020 is expected to be challenging,” he added.
Banks have been offering UK businesses government-guaranteed loans to help them survive the lockdown. But many have complained it takes too long to access the money.
Mr Staley said Barclays had already given 3,760 business loans valued at £737m, but added: “I’m sure we made mistakes.”
“We are doing everything we can to be responsive,” he said, adding that the loans scheme was “beginning to work”.
He also said the bank had granted 238,000 customers mortgage and loan payment holidays, and that more than six million customers and clients were currently paying no personal overdraft or business banking charges.
Working from home
About 70,000 Barclays staff are currently working from home due to lockdown measures around the world.
The bank did not say when its offices and branches would reopen, but indicated sites in Hong Kong would be first, followed by Singapore and Tokyo, then Europe, with social distancing measures in place.
“There will be a long-term adjustment to our location strategy,” Mr Staley added, noting that retail branches could be used for investment banking or call centre work.
“The notion of putting 7,000 people in the building may be a thing of the past,” he said.
Neil Wilson, chief market analyst at Markets.com, said Barclays may see remote working as a way to cut costs in the future.
But he suggested closing offices, call centres and branches would have a knock-on effect on other businesses.
“What about the Pret or the pub that depends on lunch trade from the City workers filling up these offices every day? The impact on the economy will be permanent.”