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.
Group profits before tax reached £2.98bn, up from £2.75bn in the first half of 2008, as revenues soared 37 per cent from £11.8bn to £16.25bn.
Barclays’ results included impairment charges of £4.56bn, up 86 per cent as businesses and individuals continue to wrestle with the impact of the downturn.
“We expect the remainder of 2009 to be challenging with continuing recessions in many of the economies in which we are represented,” said chief executive John Varley.
BarCap was the star performer among the bank’s divisions, contributing profit before tax of £1.05bn, doubling the £524m profit booked in the first half of 2008.
The unit’s growth was underpinned by the acquisition of Lehman Brothers’ US operations, which more than offset the impact of £1.9bn in impairment charges.
The group set aside £4.8bn for staff costs, a 36 per cent increase on the £3.5bn earmarked for compensation in the first half of 2008.
Investment bankers at BarCap, led by group president Bob Diamond, are expected to grab an average bonus of around £200,000 for 2009.
And Diamond expects to hire a further 1,000 staff by the end of the year, mostly in BarCap’s Asian operations.
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 “no higher priority than to ensure that we field the very best team possible”.
He also stressed that the bank was fulfilling its pledge to the government to lend more in a bid to kick start the economy, in return for the taxpayers’ financial support for the banking system.
He said the bank had extended £17bn in gross lending in the first half, dwarfing the £11bn that the bank s promised it would lend for the full year back in April.