Apologetic Barclays Tallies 13% Profit Growth
LONDON -- Barclays (ISE: BARC.L) has reported a 13% rise in adjusted pretax profit for the first half of the year. Of course, that's if you ignore pesky things such as a 450 million pound provision for compensating customers that bought hedging products possibly impacted by the LIBOR-rigging scandal.
Beneath its efforts to show the bank's contributions to the community and promises to rebuild its reputation, Barclays did see a 32% increase in profit from its credit card business. Furthermore, U.K. retail banking registered a modest 6% gain in profit before tax, thanks to lower bad-loan impairments.
While Barclays actually reported an increase in assets -- unlike Lloyds (ISE: LLOY.L) , which continues to shrink its balance sheet to something more manageable -- most of the reported growth came from stashing cash in central banks and lending short-term funds to other banks. Loans to customers were only up 5% from Dec. 31 and up 3% from a year ago.
Adding to the pain, Barclays' investment banking arm saw income rise only 4% from a year ago, and that gain was squandered on impairment charges. While this division could hold the future to Barclays's success, the current economic climate is taking its toll on companies' interest in investment bankers to help them raise money.
Despite central bankers' best efforts to help banks earn their way out of bloated, treacherous balance sheets, the going is proving tough. Barclays has showed some signs of progress, but the road ahead remains long and winding.
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