Boost for Barclays as profits rise 13 per cent

| July 28, 2012 | 0 Comments

By
Rob Davies

15:55 EST, 27 July 2012

|

15:55 EST, 27 July 2012

Shares in Barclays soared, as the beleaguered bank’s bumper first-half profit offered a moment’s respite from the blows to its reputation.

Pre-tax profit jumped 13 per cent to £4.2bn, well ahead of analysts’ consensus estimate of £3.8bn, thanks to a strong showing  from its retail and corporate divisions.

Barclays’ stock surged nearly 9 per cent to 167p as the City’s delight at its underlying momentum drowned out news of fresh charges for mis-selling and a regulatory investigation involving finance director Chris Lucas.

Barclays: Life after Bob Diamond

The bank revealed it has set aside £450m to cover the cost of mis-selling interest rate swap products to business that did not need them. Lucas admitted this was just a ‘best estimate’ because it is ‘hard to predict’ whether the total will rise.

The amount the bank has earmarked to compensate customers sold payment protection insurance (PPI) they didn’t need climbed by £300m, adding to the £1bn set aside last year.

Victims of the PPI debacle have so far been paid £894m from the bank’s compensation coffers.

The period also included the £290m fine for rigging the  Libor inter-bank lending rate, but traders zeroed in on the strength of the bank’s underlying business.

Pre-tax profit in retail and business banking was up 6 per centc to £746m, while the investment bank outperformed peers despite posting a 2 per cent decline in profit  to £2.27bn.

Bad loans across the group were stable at £1.8bn and fell 29 per cent in Barclaycard, which reported a pre-tax profit 32 per cent higher at £753m.

The bank’s bonus pool, always the subject of intense scrutiny, had reached £1.4bn at the half year compared to £1.65bn halfway through 2011. Exposure to the sovereign debt of Europe’s basket-case economies is down 22 per cent to £5.6bn

Pointing to the bank’s progress, chairman Marcus Agius said that whoever replaces Bob Diamond, who was forced out of the chief executive’s office by the Libor scandal, would find the bank in good shape.

‘Typically a new CEO has to fix a broken model,’ he said. ‘That’s the opposite of the  situation here.’

He added that Barclays is determined to remain a ‘leading global universal bank’, underlining its opposition to proposals to split retail and investment banking.

But he became tetchy about the bank’s disclosure that Lucas is being investigated over  the disclosure of fees paid to advisors on the bank’s £4.5bn and £7.3bn fundraisings from the Middle East in 2008.

Asked to give more detail  on the probe, he repeatedly snapped: ‘Enough.’

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Personally, im glad i sold when i did, question is whether to buy back in or worry about provisions they have made for bad govt debts.

Well, they say they have £4.2bn profits but would you trust these wide boys and spivs?

BECAUSE SAVERS GET ZILCH….and charging 16 percent APR on loans for cars!

Enron was making lots of profits before going bust.

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