BarCap boost sees Barclays profits jump

BARCLAYS reported an eight per cent increase in first-half pre-tax profit yesterday, as its investment banking arm Barclays Capital (BarCap) extended its first quarter boom.<br /><br />Group profits before tax reached &pound;2.98bn, up from &pound;2.75bn in the first half of 2008, as revenues soared 37 per cent from &pound;11.8bn to &pound;16.25bn.<br /><br />Barclays&rsquo; results included impairment charges of &pound;4.56bn, up 86 per cent as businesses and individuals continue to wrestle with the impact of the downturn.&nbsp; <br /><br />&ldquo;We expect the remainder of 2009 to be challenging with continuing recessions in many of the economies in which we are represented,&rdquo; said chief executive John Varley.<br /><br />BarCap was the star performer among the bank&rsquo;s divisions, contributing profit before tax of &pound;1.05bn, doubling the&nbsp; &pound;524m profit booked in the first half of 2008.<br /><br />The unit&rsquo;s growth was underpinned by the acquisition of Lehman Brothers&rsquo; US operations, which more than offset the impact of &pound;1.9bn in impairment charges.<br /><br />The group set aside &pound;4.8bn for staff costs, a 36 per cent increase on the &pound;3.5bn earmarked for compensation in the first half of 2008.<br /><br />Investment bankers at BarCap, led by group president Bob Diamond, are expected to grab an average bonus of around &pound;200,000 for 2009.<br /><br />And Diamond expects to hire&nbsp; a further 1,000 staff by the end of the year, mostly in BarCap&rsquo;s Asian operations.<br /><br />Varley said the bank had not yet made any decision on the amount of bonuses it will pay its staff but added that he had &ldquo;no higher priority than to ensure that we field the very best team possible&rdquo;.<br /><br />He also stressed that the bank was fulfilling its pledge&nbsp; to the government to lend more in a bid to kick start the economy, in return for the taxpayers&rsquo; financial support for the banking system.<br /><br />He said the bank had extended &pound;17bn in gross lending in the first half, dwarfing the &pound;11bn that the bank s promised it would lend for the full year back in April.