Pre-tax profits at the bank increased from pounds 1.27bn to pounds 1.29bn in the six months to June, roughly in line with expectations. However, analysts were concerned about cost control, and said the figures compared unfavourably with those of National Westminster Bank.
Earlier this week, NatWest surprised the City with a 49 per cent rise in pre-tax profits. Yesterday, NatWest shares gained 35p, closing at 1,175p, while Barclays shares lost 49p, closing at 1,653p.
Andrew Buxton, the Barclays chairman, said the bank had made "good underlying progress". It spent pounds 400m on share buybacks in the first half of the year, and expects to continue its buyback programme next year.
Kathryn Newton, banking analyst at Rabobank, said: "The market was expecting something a bit more exciting and a better performance on costs."
Operating expenses at Barclays fell by 2.5 per cent to pounds 2.4bn. After stripping out discontinued businesses - including the former BZW equities business - operating expenses rose by 6 per cent.
Martin Taylor, Barclays' chief executive, said the bank had significantly increased its investment spend and would take a close look at costs once EMU and year 2000 computer compliance issues were out of the way. The bank increased bad debt provisions from pounds 90m to pounds 129m, and Mr Taylor warned that the UK economy was in a "delicate state".
Barclays was well placed to participate in industry consolidation, said Mr Taylor, adding that economic downturn could lead to bank mergers.
The interim dividend was increased by 15 per cent to 15.5p a share.