Barclays reports pre-tax profits rise

LONDON – Barclays, the third-biggest British bank, said on Friday that interim pre-tax profits had increased by 9 per cent, helped by steady growth across most of its divisions, and sounded a reassuring note on bad debts.

Pre-tax profit for the six months to June 30 climbed to 2,690 billion pounds (N$30,8 billion) from 2.463 billion in the same period of last year, exceeding analysts’ forecasts. In reaction, the price of shares in Barclays soared by 4,03 per cent to 581,5 pence in afternoon London trading when the FTSE 100 of leading shares was showing a gain of 0,36 per cent to 5,334.50 points.The bank, which had alarmed investors in May with news of a faster-than-expected rise in consumer lending arrears, also signalled that it did not foresee a further deterioration in credit quality in the months ahead.”(We expect) that risk will rise broadly in line with the size of the loan book, just as it had done over the last 12 months,” chief executive John Varley told reporters following publication of the results.Concerns over a rise in defaults on consumer loans, triggered by higher interest rates and utility bills last year, have been weighing on the British banking sector.HSBC, Royal Bank of Scotland, and Lloyds TSB have reported a rise in bad consumer debts in Britain over the past week.Barclays’ total charge for bad debt – that the bank does not expect to be repaid – shot up 20 per cent to 706 million pounds but was slightly below analysts’ forecast of 723 million pounds.As a proportion of total loans, the charge fell to 0,51 per cent from 0,53 per cent a year earlier.Credit card division Barclaycard, which has borne the brunt of the rise in lending arrears, accounted for the bulk of the bad debt loss.That, coupled with heavy international investment costs, pushed Barclaycard profits down 17 per cent on the year to 379 million pounds.In contrast, profits at the core British banking division rose 10 per cent to 1.275 billion pounds, with strong growth in business banking outweighing a flat performance on the retail side.Profits also rose strongly at asset management unit Barclays Global Investors and at investment banking arm Barclays Capital, climbing 60 per cent to 242 million and 20 per cent to 703 million pounds respectively.Continued investment in Barclays Capital helped push total costs up 14 per cent to 4.542 billion pounds, matching growth in revenues, which were up 14 percent at 7.922 billion pounds.Meanwhile, Barclays said that the outlook for the rest of the year was helped by its recent acquisitions.”The growth of International Retail and Commercial Banking will be accelerated in the second half by the completion of the acquisition of a majority stake in Absa in South Africa and by the acquisition of the ING Ferri business in France,” the group said.Barclays and Absa, the largest South African retail bank group, announced on July 27 the completion of a deal in which the British bank acquired a 53,96 per cent stake for 30 billion rand.- Nampa-AFPIn reaction, the price of shares in Barclays soared by 4,03 per cent to 581,5 pence in afternoon London trading when the FTSE 100 of leading shares was showing a gain of 0,36 per cent to 5,334.50 points.The bank, which had alarmed investors in May with news of a faster-than-expected rise in consumer lending arrears, also signalled that it did not foresee a further deterioration in credit quality in the months ahead.”(We expect) that risk will rise broadly in line with the size of the loan book, just as it had done over the last 12 months,” chief executive John Varley told reporters following publication of the results.Concerns over a rise in defaults on consumer loans, triggered by higher interest rates and utility bills last year, have been weighing on the British banking sector.HSBC, Royal Bank of Scotland, and Lloyds TSB have reported a rise in bad consumer debts in Britain over the past week.Barclays’ total charge for bad debt – that the bank does not expect to be repaid – shot up 20 per cent to 706 million pounds but was slightly below analysts’ forecast of 723 million pounds.As a proportion of total loans, the charge fell to 0,51 per cent from 0,53 per cent a year earlier.Credit card division Barclaycard, which has borne the brunt of the rise in lending arrears, accounted for the bulk of the bad debt loss.That, coupled with heavy international investment costs, pushed Barclaycard profits down 17 per cent on the year to 379 million pounds.In contrast, profits at the core British banking division rose 10 per cent to 1.275 billion pounds, with strong growth in business banking outweighing a flat performance on the retail side.Profits also rose strongly at asset management unit Barclays Global Investors and at investment banking arm Barclays Capital, climbing 60 per cent to 242 million and 20 per cent to 703 million pounds respectively.Continued investment in Barclays Capital helped push total costs up 14 per cent to 4.542 billion pounds, matching growth in revenues, which were up 14 percent at 7.922 billion pounds.Meanwhile, Barclays said that the outlook for the rest of the year was helped by its recent acquisitions.”The growth of International Retail and Commercial Banking will be accelerated in the second half by the completion of the acquisition of a majority stake in Absa in South Africa and by the acquisition of the ING Ferri business in France,” the group said.Barclays and Absa, the largest South African retail bank group, announced on July 27 the completion of a deal in which the British bank acquired a 53,96 per cent stake for 30 billion rand.- Nampa-AFP