Barclays (LON:BARC) this morning reported gross profit before tax up 44% at £3.947bn for the half-year to end-June, with adjusted profit before tax up 22% at £2,963bn. Profit after tax rose 32% to £2.921bn. Diluted earnings per share from continuing operations were 19.7p, up 23% from 16p the prior year. An interim dividend of 2p per share will be paid.
Impairment charges were £3.08bn, down 32%, giving a loan loss rate of 118bps (full year 2009: 156bps), with a sharp decrease in impairment at Barclays Capital partially offset by an increase in impairment in Barclays Corporate in Spain.
Operating expenses were £9.72bn, up 21%, reflecting continued investment in the build-out of Barclays Capital and Barclays Wealth, increased regulatory costs, increased charges relating to prior year compensation deferrals, adverse impact of currency exchange rate movements and restructuring charges in Barclays Corporate.
Core Tier 1 ratio was 10% (end-December 2009: 10%) and Tier 1 capital ratio was 13.2% (end-December 2009: 13%).
John Varley, CEO, said:
'In the first half of 2010 we performed strongly against most parts of the Strategic Framework we use to manage the Group. We generated pre-tax profits of £3.9bn, up 44% (or 22% on an adjusted basis), and increased total income by 8%. We did so against a backdrop of slow growth in most of the economies and markets in which we operate, and some fragility of sentiment, particularly in the second quarter.
'Our job is to supply services and products that are relevant and helpful to our customers, and thereby generate good returns for shareholders. Our return on average shareholders' equity improved to 9.8%, albeit that this figure is still below our cost of equity and below where it needs to be. The post-tax return on our regulatory balance sheet improved significantly to 1.5%.
'As we seek to increase returns, we are carefully applying our capital resources to those businesses capable of generating the highest returns on a risk-adjusted basis. With a Core Tier 1 ratio of 10% and surplus liquidity of £160bn, together with an adjusted gross leverage ratio of 20x our Tier 1 capital, our balance sheet is well positioned to accommodate further economic uncertainty. We also believe that we are appropriately positioned to address the prudential changes that our regulators will require over the coming years.'
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