Lionel Laurent is a Bloomberg Gadfly columnist covering finance and markets. He previously worked at Reuters and Forbes.

Duncan Mavin is a former Bloomberg Gadfly columnist.

Barclays CEO Jes Staley has won himself a little breathing room -- but it will only become harder for him to keep his shareholders on board.

Stock Slide
Barclays has fallen by 34% in the past 12 months
Source: Bloomberg

At first glance, the lender's first quarter earnings on Wednesday were positive: profit beat analyst estimates and investment banking revenue outperformed U.S. peers. The stock -- down by a third over the past year -- leaped as much as 4.6 percent, before reversing that gain.

Surpassing the lowered expectations of analysts doesn't mean the work is over for Staley.

He still has to slash the size of Barclays's "bad" bank -- a drag on profits and capital ratios -- by more than half in less than two years. He is yet to prove he can cut costs while protecting revenue and the bank hasn't yet met its goal of cutting costs to less than 60 percent of income. Returns are still anemic.

The road to recovery may even be getting longer: Britain's vote on whether to remain in the EU may complicate efforts to sell the unwanted assets housed in the bad bank. At the same time, the remaining good bank is running into business headwinds.

Take the corporate and investment banking unit, a business that accounts for more than half of revenue. Staley has pledged to keep it -- despite suggestions from analysts he should sell or spin it off.

There, the decline in revenue was better than expected at 4.3 percent and better than peers, especially in credit trading and advisory. Total investment banking income, as tracked by Bernstein analysts, fell 6 percent from the year-earlier period, versus compared with declines of 14 and 36 percent at JPMorgan and Goldman Sachs.

Down Time
Revenue at Barclays' investment bank held up better than some rivals in a tough first quarter
Source: Bernstein Research
* Data is first quarter 2016 revenue compared with the same period last year

But that out-performance may well be a one-off. The bank said revenue in April was running at "slightly below" the level of the first quarter -- despite stresses in the financial markets easing since the quarter-end.

Home Steady
Revenue declined in all of Barclays' domestic business lines in the first quarter compared with last year
Source: The Company

And as for the other central plank of Staley's strategy -- the U.K. bank -- the results were hardly stellar. There, quarterly revenue fell to the lowest in two years, hurt by lower fee income and competition in the mortgage market. Wealth management has been taking a hit as clients retrench from volatile equity markets.

Troublingly, returns are still falling, and that's not wholly due to the drag of the bad bank. Group return on tangible equity fell to 3.8 percent from 4 percent in the year earlier period. Even at the U.K. consumer unit, underlying RoTE fell to 20.5 percent from 24 percent.

Staley can take heart from the fact that the quarter was a rough one for the industry -- and that Barclays managed to beat lowered expectations. He still has to prove his turnaround plan.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the authors of this story:
Lionel Laurent in London at
Duncan Mavin in London at

To contact the editor responsible for this story:
Edward Evans at