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Last updated: August 5, 2010 6:55 pm
Barclays reported a 44 per cent increase in first-half profit on Thursday, although its results were clouded by second-quarter revenue and profit declines at Barclays Capital, its investment banking arm.
The banking group said pre-tax profit for the first six months of 2010 had been £3.95bn, up from £2.75bn a year earlier and better than analyst expectations. The increase was fuelled by a drop in loan loss charges, which fell by about a third on a year-on-year basis, reflecting the stabilising UK economy.
Adjusted pre-tax profit – a measure that strips out several distorting accounting items – rose 22 per cent to £2.96bn. John Varley, chief executive, said the group’s profit growth amid continued economic and market uncertainty had been “pretty reassuring”.
However, BarCap has been struggling to match its strong revenue performance in the first half of 2009. Its second-quarter top-line income, a revenue measure, was £3.28bn, 38 per cent down on the same period in 2009.
The year-on-year revenue drop had been 26 per cent in the first quarter – a performance that had unnerved investors when its first-quarter figures were published in April.
Meanwhile, BarCap’s underlying pre-tax profit fell by a quarter to £978m in the second quarter, although it still rose 32 per cent to £2.55bn for the first half.
Bob Diamond, Barclays president and head of BarCap, blamed factors including the UK election and the passage of new financial regulation in the US for sluggish investment banking activity in May and June.
Nevertheless, he asserted that BarCap’s revenue performance had been good compared with investment banking peers.
He also said some of the political and economic uncertainties had lifted in recent weeks, making clients less risk-averse. “We have clearly seen in the second half of July more activity in the market,” he said.
A second interim dividend of 1p a share has been announced, making 2p for the first half, compared with no first-half dividend a year earlier.
Barclays shares, which have risen strongly in recent weeks, fell 1.9 per cent to 333.3p in early morning trading on Thursday.
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