Business

Barclays profits fall by a third

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Image caption Barclays said it was meeting its commitments on lending to businesses

Barclays has reported pre-tax profits of £2.6bn for the first six months of the year, down 33% from last year.

The bank also said it aimed to cut at least 1,400 more jobs in 2011, having cut 1,400 posts already this year.

The fall in half-year profits was partly caused by a £1bn provision for settling claims of mis-selling of payment protection insurance (PPI).

However the bank reported a big drop in bad debts and said it was on course to meet targets for UK business lending.

Share rise

Charges for bad debts fell 41% on last year to £1.8bn as the bank managed its exposure to troubled eurozone economies such as Spain and Portugal.

Most of Barclays' profits come from its investment banking division, Barclays Capital, which includes parts of the former US bank Lehman Brothers.

Adjusted profits at this division fell 9% to £2.3bn due to lower returns from investments in bonds and commodities.

The euro debt crisis reduced fixed income trading across the industry. With developed economies also growing slowly the results were better than forecast.

"BarCap had a relatively strong quarter compared to its peer group," said Mike Trippitt from Oriel Securities.

Underlying profits - which exclude the one-off £1bn charge for PPI - across Barclays as a whole were up 24% from a year ago to £3.7bn.

Barclays shares closed down 0.12% at 216.75p, having been up as much as 4.5% durnig the trading session.

Job losses

The bank said it was looking to cut costs to boost profits in future.

Chief executive Bob Diamond said 1,400 jobs had been cut during the first six months of the year across its operations.

"You should assume this trend will continue and increase somewhat," he said.

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Barclays currently employs more than 147,000 staff around the world.

On Monday, rival HSBC announced it would cut 25,000 jobs by 2013 as part of its own efforts to cut costs. It had already announced 5,000 job cuts.

Lending targets

Despite the reduced profits, Mr Diamond said he was pleased with the results in what he called a "lacklustre" economic environment.

He said the bank was fulfilling its deal with the government to lend to UK businesses.

"We are meeting our Project Merlin commitments and have extended £20bn of new lending to businesses in the first half," he said.

That included £7bn of lending to small- and medium-sized firms.

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