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CNBC Interview: Barclays President Upbeat as Profit Climbs

In an interview with CNBC, Robert Diamond, Barclayspresident, said he is "absolutely delighted" with the bank's first-half success -- but spoke cautiously about the subprime meltdown.

Barclays on Thursday posted a 14 percent increase in profit for the first half of the year, citing strength in its Barclays Capital investment banking division.

Net income rose 9 percent to 11.9 billion pounds ($24.2 billion) from 10.97 billion pounds ($22.27 billion), in the year-ago period.

The British financial firm reported that profit rose to 2.63 billion pounds ($5.35 billion), from 2.31 billion ($4.69 billion) pounds in the first half of 2006.

In the CNBC interview, Diamond underscored specifically strong segments: "In particular, the areas we've been emphasizing with our investments and commodities, structured equity and structured credit products."

He conceded that the two areas of "biggest concern" were subprime lending and leveraged finance, but noted, "We think they're two very different stories."

"The subprime situation is really challenging, in both primary and secondary markets. Frankly, we'd expect it to take quite a while to work out," Diamond said.

"Leveraged finance -- a very strong part of the [Barclays Capital] business, particularly in Europe -- we're a bit more sanguine about," he said.

Diamond pointed to the "very strong underpinnings of the economy" and of the corporate credit environment as signs that "it will take a while to work out supply and demand imbalance." He predicted that by the end of the autumn, "we'll see volumes return to more normalized levels."

He noted that investors are again "getting some pricing power in fixed income."

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