Barclays, one of the largest banks in Britain, said Tuesday that profit fell 38 percent in the first half because of costs for compensating customers for mistakes in selling some insurance and as earnings at its investment bank declined.
Net income fell to £1.5 billion, or $2.45 billion, in the first six months of this year from £2.4 billion in the same period last year, the company said. That was better than the £1.3 billion median profit estimate by analysts polled by Bloomberg News.
“It’s been a very difficult operating environment,” said the chief executive, Robert E. Diamond Jr. “I am pleased with the progress made across Barclays.”
Like many of its rivals, Barclays is reviewing its business to reduce costs. It was in the process of cutting about 3,000 jobs this year, Mr. Diamond said. Barclays cut 1,400 positions in the first half and Mr. Diamond said he “would expect the trend of the first half to continue and likely increase somewhat.”
Barclays said it set aside £1.8 billion for bad loans and other credit risks in the first half, a drop of 41 percent from a year earlier. Return on equity, a measure of profitability, improved to 9.1 percent from 6.9 percent. Barclays had set itself a target to reach a return on equity of 13 percent by 2013.
Barclays Capital, the securities unit, reported 9.3 percent lower pretax profit in the first half of £2.4 billion, after demand for its credit, currency and commodities services and products declined.
Pretax profit at its retail banking operation fell to £446 million in the first half from £1.2 billion after its operations on the European continent, especially in Spain, widened its pretax loss amid a deteriorating economic environment. It also set aside £1 billion to compensate customers it mistakenly sold some payment insurance to, it said.
Article source: http://dealbook.nytimes.com/2011/08/02/barclays-reports-profit-plunge/?partner=rss&emc=rss
Speak Your Mind
You must be logged in to post a comment.