Barclays reels under pounds 1bn of bad debts

SIR JOHN QUINTON, chairman of Barclays Bank, yesterday warned that the recession could last two more years, as his bank reported a dramatic fall in half-year profits and more than pounds 1bn in bad-debt provisions.

Pre-tax profits at Barclays slumped to pounds 51m, an 87 per cent decline from pounds 378m in the same period last year.

The record pounds 1.07bn bad-debt charge, which includes heavy provisions for big-name property and construction firms, in effect wiped out most of Barclays' pounds 1.17bn operating profits.

Sir John called the results 'very disappointing'. He said: 'They reflect the high level of business failure and bad debt in the UK, and the accompanying plunge in property values, the severity of which was largely unforeseen.'

The economies of many other countries where Barclays operated were also weak, he said. Provisions in the second half of 1992 would remain high.

Barclays had to dip into reserves in order to maintain the interim dividend at 9.15p.

The pounds 1.07bn set aside for bad and doubtful debts compares with pounds 799m a year earlier. UK provisions accounted for the lion's share of bad debts, pounds 658m against pounds 436m a year ago.

Sir John admitted to bad lending decisions. 'Thirty to forty per cent of our bad debts come from poor lending, and the rest is from the recession,' he said.

Two corporate customers, thought to be the property developers Olympia & York and Heron, accounted for pounds 100m of provisions. Barclays is the biggest UK lender to City property firms. But provisions in retail and personal sectors also mounted.

Sir John explained that Barclays had halted new property lending in 1988 and focused on existing loans to 'sound' property companies. But as the recession carried on and property values fell, those companies continually drew on existing credit lines with Barclays and got into difficulties.

For the past 18 months, the bank has also been incurring pounds 1m per day in provisions on loans to small businesses.

Barclays also took an exceptional pounds 82m provision related to the sale of Barclays Bank of New York and other businesses.

Andrew Buxton, who takes over as executive chairman in December, denied suggestions that institutional shareholders were pressuring the bank to split the roles of chairman and chief executive.

One of the few positive features was a 6 per cent rise in income, which helped push operating profits up by 16 per cent. Costs were also held steady.

The UK bank made a pounds 79m pre-tax loss, compared with an pounds 80m profit a year ago. The plastic card division doubled profits to pounds 51m. Other UK operations lost pounds 102m. Profits in BZW, the investment bank restructured to include treasury and other businesses, fell 37 per cent to pounds 99m.

----------------------------------------------------------------- Table: HOW THE BANKS COMPARE ----------------------------------------------------------------- Half-year to June Pre-tax Provisions Cost/income profit (pounds m) ratio % (pounds m) Barclays 51 1,072 63.9 NatWest 211 864 65.9 HSBC/Midland 89 355 72.9 Abbey National 270 138 45.2 Lloyds 369 329 63.0 -----------------------------------------------------------------

Voices
voicesGood for Lana Del Rey for helping kill that myth, writes Grace Dent
Sport
The Pipes and Drums of The Scottish Regiments perform during the Opening Ceremony for the Glasgow 2014 Commonwealth Games at Celtic Park on July 23, 2014 in Glasgow, Scotland.
Commonwealth GamesThe actor encouraged the one billion viewers of the event to donate to the children's charity
Sport
Karen Dunbar performs
Entertainers showcase local wit, talent and irrepressible spirit
Sport
Members of the Scotland deleagtion walk past during the opening ceremony of the 2014 Commonwealth Games at Celtic Park in Glasgow on July 23, 2014.
PROMOTED VIDEO
Arts and Entertainment
The Tour de France peloton rides over a bridge on the Grinton Moor, Yorkshire, earlier this month
film
Life and Style
fashion Designs are part of feminist art project by a British student
News
Very tasty: Vladimir Putin dining alone, perhaps sensibly
news
Life and Style
Listen here: Apple EarPods offer an alternative
techAre custom, 3D printed earbuds the solution?
Arts and Entertainment
Top guns: Cole advised the makers of Second World War film Fury, starring Brad Pitt
filmLt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a uniform
News
The University of California study monitored the reaction of 36 dogs
sciencePets' range of emotions revealed
News
Snoop Dogg pictured at The Hollywood Reporter Nominees' Night in February, 2013
people... says Snoop Dogg
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
A scene from Shakespeare in Love at the Noel Coward Theatre
theatreReview: Shakespeare in Love has moments of sheer stage poetry mixed with effervescent fun
News
Joining forces: young British men feature in an Isis video in which they urge Islamists in the West to join them in Iraq and Syria
newsWill the young Britons fighting in Syria be allowed to return home and resume their lives?
Arts and Entertainment
The nomination of 'The Wake' by Paul Kingsnorth has caused a stir
books
News
i100
Life and Style
food + drinkZebra meat is exotic and lean - but does it taste good?
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

PMO Analyst - London - Banking - £350 - £400

£350 - £400 per day: Orgtel: PMO Analyst - Banking - London - £350 -£400 per d...

Cost Reporting-MI Packs-Edinburgh-Bank-£350/day

£300 - £350 per day + competitive: Orgtel: Cost Reporting Manager - MI Packs -...

Insight Analyst – Permanent – Up to £40k – North London

£35000 - £40000 Per Annum plus 23 days holiday and pension scheme: Clearwater ...

Test Lead - London - Investment Banking

£475 - £525 per day: Orgtel: Test Lead, London, Investment Banking, Technical ...

Day In a Page

Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

Screwing your way to the top?

Good for Lana Del Rey for helping kill that myth, says Grace Dent
Will the young Britons fighting in Syria be allowed to return home and resume their lives?

Will Britons fighting in Syria be able to resume their lives?

Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

Beyoncé poses as Rosie the Riveter

The wartime poster girl became the ultimate American symbol of female empowerment
The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

The quest to find the perfect pair of earphones

Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears
US Army's shooting star: Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform

Meet the US Army's shooting star

Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform
Climate change threatens to make the antarctic fur seal extinct

Take a good look while you can

How climate change could wipe out this seal
Should emergency hospital weddings be made easier for the terminally ill?

Farewell, my lovely

Should emergency hospital weddings be made easier?
Man Booker Prize 2014 longlist: Crowdfunded novel nominated for first time

Crowdfunded novel nominated for Booker Prize

Paul Kingsnorth's 'The Wake' is in contention for the prestigious award
Vladimir Putin employs a full-time food taster to ensure his meals aren't poisoned

Vladimir Putin employs a full-time food taster

John Walsh salutes those brave souls who have, throughout history, put their knives on the line
Tour de France effect brings Hollywood blockbusters to Yorkshire

Tour de France effect brings Hollywood blockbusters to Yorkshire

A $25m thriller starring Sam Worthington to be made in God's Own Country
Will The Minerva Project - the first 'elite' American university to be launched in a century - change the face of higher learning?

Will The Minerva Project change the face of higher learning?

The university has no lecture halls, no debating societies, no sports teams and no fraternities. Instead, the 33 students who have made the cut at Minerva, will travel the world and change the face of higher learning
The 10 best pedicure products

Feet treat: 10 best pedicure products

Bags packed and all prepped for holidays, but feet in a state? Get them flip-flop-ready with our pick of the items for a DIY treatment
Commonwealth Games 2014: Great Scots! Planes and pipers welcome in Glasgow's Games

Commonwealth Games 2014

Great Scots! Planes and pipers welcome in Glasgow's Games
Jack Pitt-Brooke: Manchester City and Patrick Vieira make the right stand on racism

Jack Pitt-Brooke

Manchester City and Patrick Vieira make the right stand on racism
How Terry Newton tragedy made iron men seek help to tackle their psychological demons

How Newton tragedy made iron men seek help to tackle their psychological demons

Over a hundred rugby league players have contacted clinic to deal with mental challenges of game