Barclays profits jump 44% to £4 billion

(Update) Barclays shares falls more than 2% as the bank's first half performance leaves analysts unimpressed after this week's impressive results from Lloyds and HSBC.

Barclays achieved a better-than-expected 44% increase in pre-tax profits to £3.947 billion for the first six months of the year. The jump in profits from £2.745 billion a year ago reflected a fall in bad debt charges and other one-offs.

Chief executive John Varley said: 'Against the backdrop of subdued economic and market activity and the sovereign debt storm of the second quarter, we have delivered good growth in income and profits during the first half of the year.'

But analysts including top-rated Carla Antunes da Silva at JP Morgan said ‘clean’ pre-tax profit came in at £3.159 billion, below her forecast of £3.3 billion.

'Having rallied very strongly in the last month, the stock is now trading at the top end of our range,' she said as she repeated her 'neutral' recommendation.

Execution Noble analyst Joseph Dickerson said: 'These results were broadly in line but relatively unexciting and we see more momentum in Lloyds.'

So while analysts are busy lifting their full-year forecasts for Lloyds after its strong performance yesterday, Dickerson thinks the consensus for Barclays will remain more or less where it is at £6.1 billion.

Barclays shares fell 2.34% to 331.9p while Lloyds added to yesterday's gains, up 1.58% to 75.7p.

Barclays is paying a penny interim dividend bringing the total so far this year to 2p. Varley was optimistic payouts would increase in the years ahead 'as the regulatory outlook becomes clearer, and provided that the economic environment does not worsen', although he cautioned the payout rate was unlikely to return to pre-crisis levels. 

At £3.1 billion Barclays' bad loan charges were down with a sharp fall in the investment banking division Barclays Capital partially offset by an increase in provisions at the bank's corporate business in Spain.

Barclays lent an extra £18 billion to UK households and businesses in the half year. The group's retail banking divison - which accounts for less than a fifth of group profits - performed strongly with pre-tax profits up 7% to £901 million.

The group's investment banking arm Barclays Capital was less strong. Excluding a boost from a fall in the division's debt, profit rose 30% to £2.5 billion but income was down 32% to £7.126 billion as income in the fixed income division fell 40%, was 18% lower at the equities unit and down 6% at the investment banking arm.

Dickerson said the biggest worry was at Barclays' corporate banking division which made a pre-tax loss of £377 million.