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Barclays records further profit dip

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Barclays records further profit dip

Barclays has announced a further drop in profits from its investment banking division as market conditions remain challenging.

The BarCap arm, which accounts for around 80% of the company’s profits, saw top-line income drop 14% in the third quarter, while profits excluding accounting volatility fell 22% compared to the second quarter to £765 million.

A significant reduction in bad debts meant third quarter pre-tax profits rose by 8% from the previous three-month period to £1.27 billion. However, the figure was down 28% on the same quarter a year earlier.

John Varley, who will step down as chief executive in March after 14 years with Barclays, said: “Our income and profit performance was resilient for the first nine months of 2010 despite a subdued economic environment and moderate volumes.”

BarCap’s sluggish performance comes a week after Royal Bank of Scotland and HSBC posted disappointing profit figures between July and September as the financial sector counts the cost of weaker market activity.

In the UK retail banking division, profits were up by 20% to £734 million during the nine months to September 30. This reflected a £100 million gain on last year’s acquisition of Standard Life Bank and a year-on-year improvement in bad debts as economic conditions continued to improve.

Mr Varley added: “We understand what is required of us to support private sector-led economic activity and have lent some £35 billion to UK households and businesses in 2010, an increase of over 30% versus the same period in 2009.”

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