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Barclays today revealed it lent £17 billion to UK households and business in the first half of this year — already outstripping the £11 billion target it set for the whole of 2009.
Chief executive John Varley insisted Barclays was open for business amid claims that the industry is starving the economy of the lending necessary to drive a recovery. “We take our obligations to the British economy very seriously,” said Varley.
The Government is concerned that banks are hoarding funds rather than lending to cash-strapped businesses and consumers struggling through the recession.
It has ordered state-owned banks Royal Bank of Scotland and Lloyds Banking Group to lend an extra £38 billion this year after the taxpayer stumped up £37 billion to keep them afloat.
Barclays, which was not bailed out by the Government, said it is playing its part. It came as Barclays reported an 8% rise in first half profits to £2.98 billion. Revenues were up 37% to £16.25 billion.
Varley said that while the economic environment remained tough the group would continue to focus on risk management and decent returns for shareholders.
He said the bank planned to start paying quarterly dividends again before the end of the year. However, the proportion of profits distributed through dividends will be significantly lower than the 50% level of recent years as the bank keeps cash back in reserve.
“We have our feet on the ground,” said Varley. “The environment will not be easy, but I think it is right for us to be appropriately confident about our ability to manage in the future because I think we've managed reasonably well in the past.”
He said the trends seen in the first half continued in July.
Profits at investment banking arm Barclays Capital doubled to £1.05 billion in the first half.
It benefited from the $1.75 billion (£1.04 billion) acquisition of the US arm of Lehman Brothers following its collapse in September last year.
At the time, Barclays Capital boss Bob Diamond said it was “a once-in-a-lifetime opportunity for Barclays”.
Varley today said: “It is working well. We have saved four to five years of organic development. It is a very high-quality business.”
The Lehman deal doubled the size of the Barlcays Capital business in the US and it now does 40% of its business in America.
Barclays Capital profits were driven by “excellent results” in fixed income, currencies and commodities. Income was up 79% to £6.09 billion after it absorbed credit market losses of £3.5 billion. Profits at UK banking slumped 61% to £268 million as the recession sent bad debt charges soaring.
Profits were up 4% to £276 million at Barclays Global Investors which it is selling to BlackRock for $13 billion. Varley said: “Notwithstanding the tumultuous evens of the last two years, we have remained independent and profitable. It has been a humbling experience but we have been able to strengthen our balance sheet and have continued to invest to broaden our business base.”
