Barclays vows to hit profit targets despite turmoil

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The bank, which had to rush out an update on trading at investment banking arm Barclays Capital two weeks ago, said it expects "2007 earnings per share to be broadly in line with the current market consensus".

The City is predicting that pre-tax profits will rise from £6.81 billion in 2006 to about £7.1 billion this year.

Chief executive John Varley, who has spent much of the year on the failed e60 billion (£43 billion) bid for Dutch bank ABN Amro, said: "The diversification of our profits in recent years, together with the investments we have made in businesses both inside and outside the UK, is serving us well in 2007."

He added that in the first nine months to end-September, the bank had been "supported by good underlying growth in global retail and commercial banking and by resilience in investment banking and investment management in the face of turbulent market conditions in the second half".

In the UK, Barclays has benefited from the plight of Northern Rock, with strong growth in mortgages and savings. But it will again be hit by payments made to customers who challenged its overdraft fees. These cost it £87 million in the first half, and although cases against all the banks were frozen in August until a court case against the Office of Fair Trading is heard in January, it is likely to have taken another sizeable hit in the second half.

But Varley said charges against bad debts on unsecured lending in the UK continued to fall as customers reacted with caution to the recent interest-rate rises, and impairment charges on the mortgage business were "negligible".

Barclaycard grew strongly, particularly in the US where it will move into profit, and overall saw writedowns from bad debts reducing. At Barclays Global Investors, there was "strong growth in income and profit before tax in US dollars", which translated into "good growth" in sterling terms.

BarCap's recent update showed only £1.3 billion of credit-crunch losses - much less than some analysts had feared. The e200 million Barclays collected as a break fee when it lost ABN Amro to the RBS-led consortium is likely to be taken as an exceptional credit in full-year figures.