Barclays profit drops as fixed income trading falls

Barclays profit drops as fixed income trading falls

LONDON, Aug 2 (Reuters) - Barclays' first half profits fell by a third after a drop in bond trading activity at its investment bank and a charge to compensate customers who were mis-sold insurance, offsetting a sharp improvement in bad debt charges.

Performance at Barclays Capital also suffered in July, the bank said on Tuesday.

Pretax profit for the six months to the end of June was 2.64 billion pounds ($4.3 billion), down 33 percent from a year ago but above the average forecast of 2.4 billion pounds among analysts polled by the company.

Barclays Capital's half-year profit fell 9 percent on the year and revenue at the investment banking arm was down 11 percent to 6.26 billion pounds, led by a fall in fixed income revenue.

That drop was less steep than at most rivals, however, after revenue across the industry slumped in the second quarter due to the euro zone debt crisis. BarCap's income in the second quarter was down 14 percent from the previous quarter and first-half revenue from fixed income, currencies and commodities (FICC) was down 20 percent from a year ago.

New CEO Bob Diamond, the American who built BarCap into a debt market powerhouse over the previous decade, is aiming to cut 1 billion pounds of annual costs and reckons he can generate more than 6 billion pounds per year of extra revenue by 2013 under a revamp plan.

"We have made good progress in the first half delivering against these in a difficult operating environment," Diamond said in a statement.

Earnings were helped by a 41 percent tumble in bad debt charges during the first-half to 1.8 billion pounds.

But Barclays took a 1 billion pound charge to cover compensation for the mis-selling of insurance policies in Britain, which had been signalled previously.

Its underlying profit was 3.7 billion pounds, up 24 percent on a year ago. ($1 = 0.615 British Pounds)

source: reuters.com