Update: Barclays jumps after posting £3bn profit

3rd Aug 2009 11:38

Barclays shares shot up after it posted half-year profits of £3bn, despite an 86% rise in impairment charges, as profits at its investment banking division doubled. Bob Diamond, president of Barclays and head of the investment bank Barclays Capital, said the record profits made at BarCap were "sustainable" and added that writedowns that have hit profits are "past the worst."The strong results have fuelled expectations of a return to big bonuses for the group. The average net income generated per member of staff in the investment bank rose from £134,000 last year to £188,000 for just the first six months.Barclays's chief executive John Varley stressed the group will make a decision on bonuses at the end of the year and will consult the FSA and take guidance from the Walker review. "We will behave responsibly," he told BBC Radio 4's Today programme.Profit before tax for the period rose to £2,984m from £2,754m last year despite impairment charges increasing 86% to £4,556m. It posted record income of £16,253m, up 37%.The group said it saw income absorbed gross credit market losses and higher reserves of £4,677m (including impairment of £1,170m) and other group impairment of £3,386m. It added that £1,192m of gains on debt buy-backs and extinguishment more than offset £893m own credit charge. Barclays Capital pre-tax profit rose to £1,047m (2008: £524m) on top-line income that doubled to £10,489m with very strong performances across client franchises in the UK and helped by the acquisition of Lehman Brothers business. It helped offset the 61% drop in profits in UK retail division to £268m and a 42% fall in commercial banking profits to £404m. Barclaycard profit before tax increased 1% to £391m"We expect the remainder of 2009 to be challenging, with continuing recessions in many of the economies in which we are represented," said the group. "For the remainder of 2009, we expect credit market losses to be lower than in the first half but impairment trends to be consistent with those experienced over the first half," it added. Core Tier 1 was 8.8% and Tier 1 at 11.7% pro forma for the expected sale of Barclays Global Investors to BlackRock Inc. The group added that it intends to resume dividend payments before the end of 2009.