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Barclays profits fall by a third to £2.6bn 2 August 2011

A results statement published this morning explains that the drop was partially caused by Barclays having to refund claims of up to £1bn for mis-sold payment protection insurance.

But the group’s loan impairments have dropped significantly, falling across the group by 41 per cent to £1.8bn and decreasing in the UK by 38 per cent to £275m, compared to £447m in June 2010.

The group aims, however, to cut at least 1,400 more jobs in 2011, after cutting 1,400 posts already this year.

Across its UK retail and business banking divisions, consumer lending impairments were down 47 per cent to £117m from £221m as at June 2010, while business loan impairments fell 29 per cent to just £91m from £129m a year ago.

Across the group, the level of Barclays’ potential problem loans fell to £2.3bn from £2.69bn in June 2010. 

Barclays chief executive Bob Diamond said the group had performed well despite a lacklustre economic environment in many of its major markets which impacted income generation.

He added: “I am pleased with the progress made across Barclays in the first half. We have performed well on our journey to a targeted 13 per cent return on equity by 2013 and have made specific progress against our execution priorities of capital strength, returns on equity, income growth and citizenship.

“Our capital, liquidity and funding position is rock solid. We look forward to the finalisation of new banking regulations over the coming months.”

Diamond said Barclays is meetings its project merlin commitments and has extended £20bn of new lending to businesses in the UK in the first half of 2011. The group is on track to lend at least £40bn for the year.

The results also show that Barclays Corporate’s loss before tax was £47m, compared to a loss of £377m as at June 2010. This loss was largely attributed to the expected loss on selling Barclays Bank Russia.

Impairment charges in Barclays Corporate improved 35 per cent to £614m, falling dramatically from £949m in June 2010. This figure was driven by improvements in Spain where impairments decreased to £299m from £553m.

Diamond added that during the first half of 2011 Barclays Corporate supported almost 52,000 business start ups in the UK.

It is confirmed in the results statement that the bank is making a provision of £700m for Barclays Capital’s court case against the administrators of Lehman Brothers in the USA. The administrators are challenging aspects of how Barclays Capital acquired Lehman assets in 2009.

After losing the court case initially, Barclays appealed, and if its appeal fails again its loss will hit £2.7bn.



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