Barclays profit hit by weak investment banking

Barclays said key investment banking income remained weak in the past four months, countering a sharp improvement in bad debts that lifted the British bank's underlying third-quarter profit.

Barclays, whose chief executive John Varley will be succeeded by investment bank boss Bob Diamond at the end of March, said it made an underlying July-September pretax profit of £1.27bn.

Including a charge on its own credit its pretax profit was £327m in the quarter, down over 1 billion pounds.

But income at Barclays Capital fell to £2.83bn in the third quarter, down 14 per cent from the previous quarter, to extend a first-half slowdown as capital markets activity weakened.

BarCap's income in October was consistent with the run rate of the third quarter, the bank said.

Barclays has emerged as one of the relative winners from the financial crisis after steering clear of a taxpayer bailout, but there has been growing concern about BarCap's slowing momentum.

Losses on bad debts in the first nine months were down 31 per cent to £4.3bn, putting Barclays on target to beat its 2010 guidance that bad debts would fall 15-20 percent.

The bank said it was "well equipped" to deal with regulatory changes as tougher global capital rules are implemented, and its core Tier 1 capital ratio held at 10 percent at end-September.