Profits edge up at Barclays

BARCLAYS surprised investors by booking a rise in profits in all but one of its businesses yesterday.

Stripping out the effect of accounting gains and one-off provisions, its quarterly pre-tax profits rose five per cent on last year to £1.27bn despite earnings halving in its biggest division, Barclays Capital.

Profits more than doubled in its UK retail business, rising from £230m to £494m, largely due to an improvement in the quality of the bank’s loan book. Impairment charges halved from £202m to £105m, suggesting that British consumers are making progress on their personal debt pile.

However, the improvement in retail was more than offset by an anaemic quarter for Barclays Capital, the bank’s investment bank and biggest division.

Like its Wall Street rivals, which reported some of the worst results in their history last week, BarCap was hit by a sharp slowdown in trading volumes.

Its quarterly pre-tax profits fell from £765m to £388m, with its credit, commodities and emerging markets business the worst-affected.

The bank’s fixed income, currency and commodities division saw revenues slashed by almost a fifth during the third quarter of this year.

Pay is down compared to last year: over the first nine months of 2011, BarCap’s pay-to-income ratio was 46 per cent on revenues of £8.52bn.

In a sign of the pressure of stringent UK liquidity requirements, the bank also revealed that it has been storing more of its cash at central banks: its deposits have swelled in value from £85bn to £100bn over the last quarter.

Barclays also reported a 31 per cent reduction to £8bn in gross exposure to peripheral Eurozone sovereign debt.