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Barclays First-Half Profit Falls 33% on Writedowns

Reuters
Thursday, 7 Aug 2008 | 11:30 AM ET

British bank Barclays reported a 33 percent drop in first-half profits as it took a 2 billion pound writedown on the value of risky assets, but the profit drop was not as steep as expected.

Sang Tan

Britain's third biggest bank said on Thursday its pretax profit in the six months to the end of June was 2.75 billion pounds ($5.4 billion), down from 4.1 billion a year before. The average forecast was for profits of 2.63 billion, from a poll of 7 analysts.

Half-year profits at Barclays Capital fell 68 percent to 524 million pounds, as it absorbed a 1.98 billion pound writedown on its credit market exposures, net of 852 million on the debt it carries.

BarCap had estimated a 1 billion pound net writedown for the first quarter and wrote down a net 1.6 billion pounds last year. It has been criticised for not marking down its assets as much as most rivals. It has said its assets are higher quality.

The bank said its total charge for bad debts and other credit provisions was 2.45 billion pounds in the half, more than double 959 million a year before.

The bank said the outlook will remain difficult. "It would be wrong ... to suggest that the market conditions over the foreseeable future will be anything other than tough," said Chief Executive John Varley, citing slowing economies around the world.

He said in some areas "it may take quite some time" for volumes to return to past levels.

Shares of Barclays closed 1.6 percent higher.

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