Barclays chief says sorry as profits dive

That made the bank's credit crunch writedowns for the first six months of the year £2 billion and left its investment banking arm Barclays Capital, run by Barclays president Bob Diamond, nursing a 68% collapse in profits to £524 million.

In turn that accounted for the bulk of the fall in group profits from £4.1 billion to £2.75 billion in the six months to end-June on flat revenues of £11.8 billion.

"A decline in profits of 33% is acutely disappointing," admitted Varley. "And I add to that my disappointment at the decline in our share price [down 44% in the past year]. Our shareholders have had to endure a lot. We are, and we will be, working as hard as we can to create the conditions that enable a higher price to be placed on our shares over time."

He told investors there were no quick fixes, adding: "We have experienced significant writedowns. But it would be wrong to suggest that market conditions over the foreseeable future will be anything other than tough, not least because we are now seeing the impact of slowing economies around the world and that means we must remain very vigilant to managing risk.

"In some areas of our business, it may take quite some time for volumes to be restored to those we have seen in the past: we see patterns of deleveraging by both companies and personal customers around the world, and this will continue to impact on activity levels."

Varley said that following the recent £4.5 billion fundraising backed by four sovereign wealth funds and a major Japanese bank he planned to use around half of it to keep the bank's capital ratios above target and half to expand the business over time. The key measures of balance sheet after the fundraising are a Tier One capital ratio of 9.1% and a core equity ratio of 6.3%.

Varley said the group's risk exposures had been reduced considerably in the first half, but could not rule out further markdowns if credit markets continue to deteriorate. In the UK the bank's 11.5 million customers helped push profits up by 7% to £690 million with a particularly strong performance in mortgage lending, where Barclays' share of net new lending soared from 6% to 26% as it took advantage of competitors pulling out of the market.

Barclaycard saw a 10% rise in bad debt provisions, largely as a result of its takeover of rival card Goldfish. But its profits rose 30% to £388 million.