Barclays Posts $4.9bn Profit for H109

Barclays (BCS) saw its pretax profit rise 8% to £2.9bn ($4.9bn) in the first half of 2009 (H109) as the firm’s UK retail banking segment continued to increase lending. Total loans and advances to customers climbed £1.7bn, and net new mortgage lending stands at £2.2bn with an average loan-to-value ratio of 44% in the mortgage book. Barclays’ H109 income absorbed £4.6bn in gross credit market losses, including impairment of  £1.17bn. Impairment charges increased 63%, driving down Barclays’ UK retail banking profit before tax, which decreased 61% to £268m because of “the deteriorating economic environment and growth in assets.” In September of 2008, Barclays spent $1.75bn buying Lehman Brothers’ core assets in the US. Barclays’ total assets decreased by £508bn to £1.5trn in H109. “The investments we have made, particularly in our international businesses, are driving very strong income performance and allowing us to absorb the consequences of the economic downturn. Our capital base is stronger and we have significantly reduced leverage,” says John Varley, Barclays chief executive, in the report. Chris Lucas, the group finance director at Barclays, expects lower credit market loss for the rest of 2009 but impairment trends to remain the same. “As well as interest rate reductions, governments in the UK and elsewhere have taken significant measures to assist borrowers and lenders,” Lucas says in the report. “We expect the combined impact of these measures and the lower interest rate environment to be positive for the economy in time.” Barclays’ capital ratios jumped to 8.8% from 5.6% in December 2008. The ratio is adjusted pro forma for the anticipated sale of Barclays Global Investors to investment management firm BlackRock, to be completed at the end of 2009. The transaction will give Barclays a 19.9% stake in the enlarged BlackRock Global Investors business. Both companies agreed to consider a $13bn sale price. Write to Jon Prior.