Barclays gets one-off investment banking boost

AP News
Posted: Oct 31, 2011 7:15 AM
Barclays gets one-off investment banking boost

Barclays PLC reported a 7 percent rise in net profit in the first nine months on Monday, largely on the back of a one-time boost from investment banking and said it did not need to raise any new money as it reduced its exposure to bad European debt.

The bank posted a net profit of 2.65 billion pounds ($4.25 billion) for the period compared to 2.48 billion pounds a year earlier.

Revenue was up 10 percent to 25.2 billion pounds in part due to a 3 billion pounds credit gain in the third quarter.

The bank said the gain came from widening spreads on Barclays Capital's structured products, a range of investment products which typically include complex derivatives.

For the third quarter, pretax profit was up from 327 million pounds a year ago to 2.4 billion pounds, again reflecting the one-off gain. Adjusted pretax profit for the quarter was up 5 percent to 1.34 billion pounds, broadly in line with the market consensus.

The adjusted figure excludes the own credit, a 1.8 billion pounds writedown on its stake in the investment firm BlackRock Inc. and other one-time items.

Barclays Capital third-quarter income excluding the gain was down 15 percent to 2.25 billion pounds.

Barclays shares were up 2.9 percent to 207 pence in early trading on the London Stock Exchange.

Ian Gordon at Evolution Securities, who maintains a "buy" on Barclays, credited the company with "solid broad-based profitability."

Gordon said there were a number of "creditable" divisional performances, with 2decent underlying quarter-on-quarter profit growth in U.K. retail and business banking and Barclaycard."

The bank reported that it had reduced its exposure to sovereign debt in Spain, Italy, Portugal, Ireland and Greece by 31 percent in the quarter to 8 billion pounds, with about half of the remaining exposure in Italy.

Bob Diamond, the bank's chief executive, said he was pleased with the nine-month results "despite significant economic and market headwinds."

"Rock solid capital, funding, and liquidity have been maintained," Diamond said. "We will continue to generate sufficient capital for our business needs and do not intend to raise new equity capital."