Barclays profits fall sharply
Barclays first-half profit has fallen by a third after it was forced to set aside £1bn to compensate customers who were mis-sold insurance.
The bank’s key investment banking unit, Barclays Capital, saw a drop in revenue.
Pre-tax profit for the six months to the end of June was £2.64bn, down 33 per cent from a year ago but above the average forecast of £2.4bn among analysts polled by the company.
At the investment banking arm, the half-year profit fell 9 per cent and revenue was down 11 per cent to £6.26bn, led by a fall in fixed income revenue.
That drop was less steep than at most rivals, however, where revenue across the industry slumped in the second quarter due to the eurozone debt crisis.
BarCap’s income in the second quarter was down 14 per cent from the previous quarter, and first-half revenue from fixed income, currencies and commodities (FICC) was down 20 per cent from a year ago.
New CEO Bob Diamond, the American who built BarCap into a debt market powerhouse over the previous decade, is aiming to cut £1bn of annual costs and reckons he can generate more than £6bn per year of extra revenue by 2013 under a revamp plan.
“We have made good progress in the first half delivering against these in a difficult operating environment,” Mr Diamond said in a statement.
Earnings were helped by a 41 per cent tumble in bad debt charges during the first-half, to £1.8bn.
But Barclays took a £1bn charge to cover compensation for the mis-selling of insurance policies in Britain, which had been signalled previously.
Its underlying profit was £3.7bn, up 24 per cent on a year ago.