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August 4, 2009

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Barclays in turnaround driven by investment

BARCLAYS PLC said yesterday that first-half net profit increased 10 percent on stronger earnings from its investment banking division, although losses from bad loans rose steeply and consumers in the United States and Britain had more trouble repaying credit-card debt.

Net profit for the six months ending on June 30 was 1.888 billion pounds (US$3.16 billion), compared to 1.718 billion pounds in the previous year.

Impairment charges for bad loans increased 73 percent to 3.9 billion pounds, and unpaid credit-card bills in the US and Britain, both symptoms of the recession, also hit earnings.

Barclays said a third of the increase was due to currency movements and methodology revisions, with the remainder attributed to the recession.

Revenue net of insurance claims was up 37 percent to a record 16.25 billion pounds.

Barclays' shares were up 2.4 percent at 309.4 pence on the London Stock Exchange.

They have recovered from a low of 51.2 pence on January 23 during the depths of the banking crisis that saw several of Britain's biggest banks bailed out by the government.

"Investors are beginning to appreciate the progress Barclays has made," said Richard Hunter, analyst at Hargreaves Lansdown Stockbrokers, who rated the shares as a "cautious buy."

Pre-tax profit from the Barclays Capital investment banking and securities division increased 100 percent to 1.05 billion pounds, boosted by the acquisition of the North American business of bankrupt US investment bank Lehman Brothers.

The recession hurt earnings at Barclays' retail and commercial division, where impairment charges on retail lending doubled to 1.98 billion pounds, while gross lending and advances were slightly lower at 200.55 billion pounds compared to 201.59 billion pounds at the end of last year.


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