Barclays bank reports soaring profits in first half

5th August 2010, Comments 0 comments

British bank Barclays boosted first-half profits by nearly a third with a big drop in bad debts, and strong lending and investment banking activities, it said on Thursday.

The results are another sign of revival by the banking sector, severely hit during the economic crisis, since several banks have reported strong figures in the last few days.

Barclays said that net profit was 2.4 billion pounds (2.9 billion euros, 3.9 billion dollars) in the six months to June, up 29 percent from the figure for the first half of 2009.

Pre-tax earnings leapt 44 percent to 3.9 billion pounds. Investment banking unit Barclays Capital more than tripled this figure to 3.4 billion pounds.

Bad debt charges plunged 32 percent to 3.080 billion pounds, while income rallied 25.5 percent to 13.501 billion.

The bank was also lifted by an 851-million-pound credit gain related to improving debt positions. On an underlying basis, with those gains stripped out, pre-tax profits advanced 22 percent to 3.0 billion pounds.

"Against the backdrop of subdued economic and market activity and the sovereign debt storm of the second quarter, we have delivered good growth in income and profits during the first half of the year," Barclays chief executive John Varley said in the results statement.

"At the same time as lending a further 18 billion pounds to UK households and businesses, we have kept the regulatory balance sheet under tight control."

His comments followed a recent call from the British government for the banking sector to use their first-half profits to boost lending to businesses that are struggling to obtain funds.

Barclays is the latest British bank to report surging profits, continuing a trend set by rivals HSBC, Lloyds Banking Group and Standard Chartered earlier this week. Royal Bank of Scotland unveils its latest figures on Friday.

Despite the bumper results, Barclays' share price fell 2.63 percent to 331.66 pence in morning deals on London's FTSE 100 index of top shares, which rose 0.29 percent at 5,401.66 points.

"In all, this is a robust performance given a difficult first half of the year," said Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers.

"The reliance on the investment banking operation, where progress has slowed, continues to cast something of a shadow over the shares."

Trading revenues at the investment arm Barclays Capital fell 15 percent in the second quarter compared with the previous three months. The division has a large US business after the purchase of operations from collapsed bank Lehman Brothers in late 2008.

Barclays survived the financial crisis without government support unlike some rivals, because it obtained a seven-billion-pound capital injection largely backed by Abu Dhabi and Qatar -- which have both since trimmed their stakes.

The British bank is sponsoring London's new cycle hire scheme that was launched by Mayor Boris Johnson last week.

© 2010 AFP

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