We don't need to buy growth, says Barclays chief

Matt Barrett, chief executive of Barclays Bank, said yesterday the bank did not need an acquisition to achieve its target of doubling its share of the mortgage market.

Matt Barrett, chief executive of Barclays Bank, said yesterday the bank did not need an acquisition to achieve its target of doubling its share of the mortgage market.

Barclays has been talked of in recent months as a potential bidder for Abbey National and Alliance & Leicester. But Mr Barrett insisted Barclays was setting out to achieve its goals in mortgages and long-term savings from its own resources.

The bank has set up a special unit to target the mortgage market with innovative products like the 5.99 per cent two year no-lock in fix just launched. "If all the planets were in the right quadrant and all other criteria, like compatibility of cultures, were met I would not discount it. But I would expect to achieve our objectives organically," he said.

Figures out yesterday showed operating profits before restructuring charges and exceptionals up 24 per cent to £1.77bn for the first half of the year. However, the figures were much in line with City expectations and the shares dropped 52p to 1563p.

Jon Kirk, analyst at Fox Pitt Kelton, said: "There are positive and negatives in this statement. There is strong income growth and it is coming across the board and not just from one-offs like dealing profits. On the other hand, provisions are very high and the interest rate margin is very sharply down."

Mr Barrett insisted that in spite of the bad publicity over April's branch closures, and the row over cash machine charges,the bank was winning new customers and doing more business with existing clients. However, he admitted he was not satisfied with performance in the mortgage market and in long-term savings.

He also described recent computer problems which had forced the bank to delay a planned upgrade in its online banking service as "unacceptable". "There will be some bumps in the road - you may have noticed some already." But he added: "Public relations will take care of itself if we do an outstanding job [ for our customers] and that is what we are doing."

Since Mr Barrett's arrival last year, Barclays has begun a reorganisation programme which the chief executive describes as "open heart surgery".

Bad debt provisions were up by £56m to £376m as the bank set aside more money to cover the growth in consumer and credit card lending. Margins slumped from 3.5 per cent to 3.17 as Barclays stepped up efforts to win business from rivals.

Analysts were also bemused about the way Barclays had changed the way it has presented its costs. Last year when it announced plans to cut 7,500 jobs the bank said it would hold costs at 1999 levels while growing revenue.

Yesterday's numbers broke out business as usual costs which were flat at £2.099bn. Investment spending was up 14 per cent at £162m while "revenue related costs" doubled to £255m.

At the full-year results presentation in February Mr Barrett charmed City analysts with a chat-show host style.

Yesterday he appeared more downbeat. Having used the full year results as a platform for his view of the business "from 40,000 ft" he said that yesterday was about what was happening on the ground: "Ultimately ... strategic planning has to degenerate into work."