Barclays sees profits soar

Barclays reported a large rise in first-half profit driven by a drop in credit impairment charges as the economy recovers. Pre-tax profit for the six months through June jumped to £4.98 billion, up from £1.27 billion year-on-year.

Credit impairment releases fell to £742 million, down from £3.79 billion, more than offsetting a 3% drop in income to £11.36 billion pinned on currency headwinds.

First-half profits have nearly quadrupled compared to a year ago, with the bank’s strong performance. Group profit before tax in the six months to June was £5bn, up from £1.3bn in the first half of 2020 and well above the £4.1bn consensus expectation among City analysts.

Commenting on the figures Nicholas Hyett, Equity Analyst at Hargreaves Lansdown said  “Conditions aren’t exactly ideal for banks right now – though you wouldn’t know that from Barclays’ profit before tax, which nearly quadrupled year-on-year.”

“Low interest rates always make turning a profit on loans more challenging. But to make matters worse consumers and businesses are increasingly paying down higher interest accounts.”

“Loans in the international consumer and cards business have fallen from £40.8bn at the end of 2019 to £30.9bn 18 months later, while UK customers have cut credit card borrowing by £1.1bn since the start of the year. That trend does seem to be slowing as the economy reopens, and perhaps even going into reverse. But it’s a headache for Barclays nonetheless.”

“None of that matters all that much right now though, a huge swing in credit impairments has swept all before it in these results. And that’s likely to be a theme for the rest of the year. So long as the economic outlook continues to improve Barclays results will look rosier.”