BANKING giant Barclays revealed a surprise third-quarter profit – despite its investment banking arm facing market turbulence.
Barclays, which has cut 3,500 jobs so far this year, reported a 5% increase in underlying pre-tax profits to £1.34bn in the three months to September 30 – which comfortably beat City forecasts.
Retail banking in the UK, Europe and Africa, as well as its Barclaycard arm, all reported revenue and profit growth, which offset declines at its investment banking division Barclays Capital.
Increasing global recession fears – driven by concerns over the eurozone debt crisis and the size of US debt – hit investment banks hard in the period, including US giants Goldman Sachs and JP Morgan.
Elsewhere, Barclays said the group’s bad debt charges were down by 34% to £2.8bn while sovereign exposure to Spain, Italy, Portugal, Ireland and Greece reduced by 31% to £8bn.
The bank also reported gross new lending to businesses of £33bn, including £11bn to small businesses, putting them on track to meet Government-agreed Project Merlin targets.
Chief executive Bob Diamond said Barclays had put in a “reassuring” performance during a period of “considerable challenge and uncertainty”.
BarCap reported a 15% fall in revenues to £2.3bn and a 49% plunge in underlying pre-tax profits of £388m.
Mr Diamond said BarCap, which contributes to more than half the group’s profit, had been “clearly impacted” by the market environment but the division continued to make progress.
Mr Diamond said Barclays expected the weaker market conditions to continue well into next year but it was still on course to meet targets set over the summer, including £1bn in cost savings.
He said the eurozone rescue deal struck last week was “calming and substantive” but there was more work to be done.
The weaker performance at BarCap was offset by a strong show at its UK retail banking division, which saw revenues increase by 21% to £1.2bn and pre-tax profits more than double to £494m. Barclaycard saw pre-tax profits increase by 54% to £378m.
Shares in Barclays fell by 5.9p to close at 195.3p after the results were published.
Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said: “As expected, the investment banking unit has seen a significant decline in revenue, set against an erratic trading environment. Regulatory concerns remain a feature, even though the UK banks seem to have excused themselves from the European re-capitalisation requirements.
