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Barclays today revealed it lent £17 billion to UK households and business in the first half of 2009 - already outstripping the £11 billion target it set for the whole of 2009.
Chief executive John Varley insisted Barclays is open for business amid claims the industry is starving the economy of lending essential to drive the recovery. "We take our obligations to the British economy very seriously," said Varley.
His comments came as Barclays reported an 8% rise in first half profits to £2.98 billion. Revenues were up 37% to £16.25 billion.
The Government is concerned banks are hoarding funds rather than lending to cash-strapped businesses and consumers struggling in 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 already playing its part.
The rise in profits was driven by a stellar performance at its investment banking arm Barclays Capital, where profit doubled to £1.05 billion.
Profits at UK banking slumped 61% to £268 million as the recession sent bad debt charges soaring from £288 million to £469 million.
Bad debts across the group jumped 86% from £2.45 billion to £4.56 billion as unemployment and the recession hit borrowers around the world.
The Barclays profits were a little below the £3 billion-plus expected in the City, but shares rose 6.2% or 19.9p to 322.3p as investors were reassured over the strength of the bank.
"The markets think the worst is over," said Mike Lenhoff, chief strategist at Brewin Dolphin. "They are getting to a point that a lot of what is troubling them is now in the past."
The bank's tier one capital ratio - a key measure of financial health - will rise to 11.7% following the sale of Barclays Global Investors to BlackRock for $13 billion.
Simon Maughan of MF Global Securities said: "Their first priority is to make sure they can turn around to a regulator and say 'Our balance sheet is under control'. They have done that."
Varley said that while the economic environment remains tough the group will continue to focus on risk management and decent returns for shareholders. He said the bank plans to start paying quarterly dividends again before the end of the year, but the proportion of profits distributed through dividends will be significantly lower than the 50% level of recent years.
Reader views (8)
NOW THAT THE BANKS ARE MAKING MONEY AGAIN CAN THEY REDUCE THEIR OVERDRAFT RATES TO WHERE THEY WERE WHEN WE HAD A CRISIS
- Mr S.Port, London, 04/08/2009 00:59
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That is what the bank is there for. To lend money to people who need money. God bless the little furry creatures!
- Gh, Lara, Australia, 03/08/2009 23:53
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Georg,
Well you would say that wouldn't you. Clearly one of the main reasons for RBS's failure was that those who ran the bank at the top didn't understand complex derivatives - they admitted as much before the Treasury Select Committee. And how many of those at the BOE, FSA et al did either when scrutinising the accounts of Barclays and HSBC? We have a culture in the City in which members of the financial elite devise strategies so abstruse that they are impenetrable to others - management and auditors both.
- Richard Kennard, Welling, 03/08/2009 18:43
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How many people at the FSA,BOE and the Treasury really understand complex derivatives - few if any I would say; the governor of the BOe has admitted as much. The attention of supposed experts to the accounts of Barclays and HSBC does nothing to reassure those who know the cynicism of the financial elite. And as I was remined recently: it was experts who designed the Titanic.
- John, Dartford, 03/08/2009 17:54
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Both Barclays and HSBC went through probably the most rigorous resilience and audit in British banking history and passed in order to avoid being compulsorily bailed out of the government plan. Therefore the constant griping by the usual conspiracy merchants would be taken with a pinch of salt. RBS failed because they vainly bought ABN for £50bn more than it was worth and HBOS and Northern Rock had a business model heavily biased towards CDOs.
I know people in both organisations and they have got there via cost cutting and sound strategy.
- Hansel, London, 03/08/2009 17:01
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Sometimes Mr Kennard, you just have to accept that the truth may be not be how you yourself see things. Barclays has just released a set of results which would have been crawled over by the Govt, the Treasury, the FSA, the Bank of England, the auditors, the non execs and the analysts. What make s you think that you know better and that there is something hidden in the wood work. If I were you I would be pleased that there is at least one bank out there who unlike its Scottish competitors did not get it wrong and are doing a good job now getting it right.
- Bob, London, 03/08/2009 17:01
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Much has been made of Barclays and HSBC having conducted themselves more prudently than their rivals, John Varley certainly looks smug in your photo as ever, but we all know that they were just as active in the toxic derivatives markets. Why would they now be any less fragile - it doesn't add up. Perhaps they've just been more devious in concealing the true weaknesses in their financial positions. Who knows what horrors are lurking off balance sheet?
- Richard Kennard, Welling, 03/08/2009 15:14
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Seen your picture. Do we want a banker who looks like that? Well, yes, actually we do - we might even trust him with our money, rather than the Dutch and South Africans who get it all now.
- Steve, London, England, 03/08/2009 14:55
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