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Barclays profit slumps by a third | Barclays profit slumps by a third |
(about 1 hour later) | |
Barclays has seen pre-tax profits drop 33% in the first half of 2008 following more credit crunch related writedowns. | |
The bank made £2.75bn, down from £4.1bn, which it said was "acutely disappointing" but which beat many analysts' expectations. | |
The fall in profits was less than that seen by most of its competitors. | |
Barclays said it had taken charges of £2.45bn for bad debts, including exposure to US sub-prime mortgages and other credit market problems. | |
Barclays has done particularly well, given that so much of its growth over the past few years has come from an investment bank Robert PestonBBC Business Editor class="" href="http://www.bbc.co.uk/blogs/thereporters/robertpeston/2008/08/barclays_credit_and_credibilit.html">Read Robert's blog in full | |
'Tough' conditions | 'Tough' conditions |
Barclays said the outlook would remain difficult. | Barclays said the outlook would remain difficult. |
"It would be wrong... to suggest that the market conditions over the foreseeable future will be anything other than tough," said chief executive John Varley - pointing to slowing economies around the world. | "It would be wrong... to suggest that the market conditions over the foreseeable future will be anything other than tough," said chief executive John Varley - pointing to slowing economies around the world. |
"That means that we must remain very vigilant to managing risk." | "That means that we must remain very vigilant to managing risk." |
He added that some parts of the business "may take quite some time" to return to the profitability of previous years. | He added that some parts of the business "may take quite some time" to return to the profitability of previous years. |
The £2.45bn of charges in the first six months of 2008 compared with £959m of writedowns in the same period a year ago. | |
Barclays' investment banking arm - Barclays Capital - saw profits fall 68% to £524m, after it took nearly £2bn in writedowns as a result of the credit crunch | |
Capital raising | |
BBC business editor Robert Peston said that Barclays had done well, especially given that so much of its growth over the past few years has come from Barclays Capital (Barcap) - which remained profitable. | |
"More-or-less every analyst on the planet expected Barcap to be the pre-eminent credit-crunch victim," he said. | |
"But, to date, Barcap has not suffered credit losses anywhere near as big as Merrill, or UBS, or even Royal Bank of Scotland" | |
Barclays has 11.5 million UK customer accounts, and 786,000 mortgage accounts. | |
At its credit card operation Barclaycard, bad debt charges increased 10%, partly because of its recent purchase of Goldfish. | |
Barclays recently raised £4.5bn from investors to boost its balance sheet. | |
The bulk of shares were sold to major overseas and institutional investors, led by Qatar, China and Singapore. | |
And earlier this week Barclays agreed to sell its life assurance arm to Swiss Re for £753m as part of its capital raising efforts. |