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Barclays profits fall by a third

Yuan Phoon

August 2, 2011

The bank also reported £7.6bn in gross new mortgage lending down 10.6% on the £8.5bn it did in the first six months of 2010.

This marks an estimated 12% share of the gross mortgage market by value, down 2% from the same period last year.

To make up for the contracted growth in profits, the bank said it aimed to cut at least 1,400 more jobs in 2011 after already cutting 1,400 posts already this year.

The fall in half-year profits was partially attributed to the £1bn provision for settling claims of payment protection insurance mis-selling.

The bank also reported a drop in bad debts and said it was on course to meet its Project Merlin commitments having extended £20bn of new lending to business in the first half including £7bn to small and medium sized firms.

Barclays is the second of the of the major UK banks to report their half year results. Lloyds Banking Group are due to report theirs on Thursday and the Royal Bank of Scotland will make their report on Friday.

On Monday HSBC reported first half profit growth of 3% with a 35% increase in gross mortgage lending compared to the same period in 2010.

Most of Barclay’s profits came from its investment banking division, Barclays Capital, which includes parts of the former US bank Lehman Brothers.

Bob Diamond, chief executive at Barclays, said: “I am pleased with the progress made across Barclays in the first half. We have performed well on our journey to a targeted 13% return on equity by 2013.

“Our capital, liquidity and funding position is rock solid. We look forward to the finalisation of new banking regulations over the coming months.

“This will help us balance requirements to hold more capital and liquidity on the one hand, with the desire of shareholders for us to distribute higher dividends and with business demand for us to help support economic growth, on the other.

“In the meantime we are meeting our Project Merlin commitments and have extended £20bn of new lending to businesses in the UK in the first half. We are on track to lend at least £40bn for the year.”


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