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Barclays was today forced to write off another £4.56 billion as unemployment soared in the UK and the recession hit borrowers around the world.
The firm said impairment charges jumped 86% in the first half of the year from £2.45 billion in the same period of 2008 despite signs of strength elsewhere in the bank.
It came as loans to businesses and households struggling through the downturn turned sour.
“We expect the remainder of 2009 to be challenging with continuing recessions in many of the economies in which we are represented,” said chief executive John Varley.
Barclays Uk retail banking arm, which last year made up a quarter of earnings, reported a 61% slump in profits to £268 million. Impairment charges in the UK rose from £288 million a year ago to £469 million. “Profits are down but it still recorded a profit,” he said. Varley said mortgage lending increased by £6 billion in the first half as the number of mortgage accounts rose to 824,000.
The bank has attracted one million new savers in the past 12 months as customers desert apparently less secure banks.
Varley warned the retail bank will remain under pressure as unemployment in the UK soars and businesses struggle to repay loans as the recession rumbles on.
Unemployment looks set to hit three million next year, putting pressure on family finances. Barclays said nearly 1% of its loans to customers were now in trouble, up from 0.65% a year ago.
