By Agency Reporter

Wednesday, 10 Nov 2010

Barclays has reported a small rise in underlying profits in the latest quarter as business continued to slow, British Broadcasting Corporation reported.

Total profits for the third quarter were £1.27bn before adjusting for the rising market value of Barclays debts, up 8.5 per cent from the previous quarter, but down 28 per cent from a year ago.

Net of this ”own credit charge” profits before tax were only £327m, down 76 per cent.

Gross income of £7.4bn – a measure of overall business – was down 4.5 per cent from the quarter before and 9.5 per cent from 2009.

The fall in business was led by a 24 per cent year-on-year drop in top level income at the firm‘s investment bank, Barclays Capital, according to the UK company‘s statement.

While Barclays Capital saw fees from advisory work holding up well, revenues at its various capital markets sales and trading business lines continued to sag.

However, the Barclays group overall benefited from a reduction in losses on its existing loans portfolio.

Total impairments of £1.22bn in the quarter were down 23 per cent from the previous three months, and down 27 per cent from a year ago.

”Our income and profit performance was resilient for the first nine months of 2010, despite a subdued economic environment and moderate volumes,” said current chief executive John Varley, who will make way for the former head of Barclays Capital, Bob Diamond, in March.

Markets took the results well, with Barclays‘ share price rising three per cent to about 294 pence in morning trading.

Much of the poor performance had been anticipated by markets, according to equity analyst Michael Trippitt of brokerage Oriel Securities, and was already reflected in the price.

Instead, he points to the turnaround in bad debts, as well as receding fears over the bank‘s need to raise new capital, as reasons for the rally following the results‘ release.

”There had been concerns about possible capital-raising because of Basel III,” he told BBC News, referring to the new, stricter international capital requirements.

But he said Barclays‘ management made surprisingly upbeat comments on an investor conference call about the bank‘s ability to expand its way to a healthier capital ratio, and to take actions to lower capital requirements under the new rules.

Source: Punch