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Barclays is the shining light of the UK banks

By Jon Menon | February 10, 2009, Tuesday | Print Edition

BARCLAYS Plc, the third-biggest United Kingdom bank by assets, said second-half profit rose more than analysts estimated, helped by one-off gains from the purchase of Lehman Brothers Inc assets and the sale of an insurance unit.

Barclays rose as much as 12 percent in London trading after saying writedowns this year will be less than last year's 8.1 billion pounds (US$12.07 billion). Net income jumped to 2.66 billion pounds, or 31.3 pence a share ?? up 49 percent from last year's second half on Bloomberg News estimates.

"It looks like a pretty good underlying performance and start to 2009," said Michael Trippitt, an analyst at Oriel Securities Ltd, who has an "add" rating on Barclays. "It's a reminder that there's a bank that's alive and well."

Barclays reported results a week ahead of schedule as Chief Executive John Varley tried to head off speculation about credit-market losses that have clipped 32 percent off the company's stock price this year.

The bank took a tax-related gain of 2.26 billion pounds on last year's purchase of Lehman Brothers assets in North America. It made 1.7 billion pounds on the rising yields and falling market value of its own bonds, meaning it could buy back its debt for less than before. It also made gains on the sale of a life insurance business and sale of stock in Mastercard and Visa.

Barclays' profit comes down to "a lot of one-offs," said Simon Willis, a London-based analyst at NCB Stockbrokers Ltd. He has a "reduce" rating on the stock.

Barclays has repeatedly denied that it lacks capital and declined to accept money from the UK's 50 billion-pound bailout fund to avoid accompanying lending requirements.

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