Shares soar as Barclays raises buy-backs

Barclays' shares soared yesterday after the bank reported higher first- half profits and told investors it had pounds 200m more to spend on share buy- backs this year than it had previously thought. The group will buy in pounds 700m of shares this year rather than the pounds 500m it promised shareholders six months ago.

The shares reached a high of pounds 14.65, a gain of 137.5p, before closing at pounds 14.47, 119.5p up on the day. In line with other financial stocks, they have soared recently as the stock market has reappraised the prospects for banking profits in the current low-inflation environment.

Reported profits for the six months to June were flat at pounds 1.27bn, but before a one-off hit to the bank's leasing activities from a change in the rate of corporation tax there was an underlying 8 per cent increase. The figures were in line with expectations, as was a 17 per cent increase in the dividend to 13.5p.

Analysts were taken aback by the surge in the share price, which added almost 10 per cent to the value of the bank. It followed big jumps in the past week from HSBC and Loyds TSB after they reported better than expected first-half results.

Martin Taylor, chief executive, said the decision to increase the scale of this year's buy-backs reflected a stronger capital position than six months ago when he had made a prudent assessment of the bank's excess funds. Barclays has already bought back pounds 290m of shares, leaving pounds 410m still to come, and has returned pounds 1.75bn to shareholders over the past two years.

One of the features of the figures was a sharp improvement at BZW, the investment banking division where profits collapsed in the second half of last year. Although below the pounds 148m achieved in the first six months of 1996, the pounds 124m interim profit compared favourably with the pounds 42m in yesterday's second half.

Profits would have been almost as good as last year's first half were it not for a pounds 20m loss on equity derivatives trading in the run up to the Budget. Changes to the rules on dividend tax credits hit contracts which had been written on the basis of the previous rules.

Mr Taylor was upbeat about prospects for BZW, following an improvement in its return on capital from 8 to 12 per cent. Earlier this week, rival NatWest Markets reported a 2.4 per cent return on its equity.

He insisted there was more to go for at the equities, markets and investment banking operation, and set a target return of 20 per cent for the business. The division has been radically overhauled since chief executive Bill Harrison arrived from Robert Fleming last year, with all three of its main operations now under new leadership.

Elsewhere, personal and business banking both grew strongly. Personal banking benefited from consumer sector growth, especially in credit card and consumer finance areas.

Investment Column, page 23

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Life and Style
Steve Shaw shows Kate how to get wet behind the ears and how to align her neck
healthSteven Shaw - the 'Buddha of Breaststroke' - applies Alexander Technique to the watery sport
footballShirt then goes on sale on Gumtree
Terry Sue-Patt as Benny in the BBC children’s soap ‘Grange Hill’
voicesGrace Dent on Grange Hill and Terry Sue-Patt
Arts and Entertainment
Performers drink tea at the Glastonbury festival in 2010
A poster by Durham Constabulary
Cameron Jerome
footballCanaries beat Boro to gain promotion to the Premier League
Arts and Entertainment
Emily McDowell Card that reads:
artCancer survivor Emily McDowell kicks back at the clichés
Arts and Entertainment
Twin Peaks stars Joan Chen, Michael Ontkean, Kyle Maclachlan and Piper Laurie
tvBadalamenti on board for third series
Life and Style
Standing room only: the terraces at Villa Park in 1935
Ben Stokes celebrates with his team mates after bowling Brendon McCullum
sportEngland vs New Zealand report
Amal Clooney has joined the legal team defending 'The Hooden Men'
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Abuse - and the hell that came afterwards

Abuse - and the hell that follows

James Rhodes on the extraordinary legal battle to publish his memoir
Why we need a 'tranquility map' of England, according to campaigners

It's oh so quiet!

The case for a 'tranquility map' of England
'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

Could have done with Osama bin Laden staying alive?

Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
New exhibition celebrates the evolution of swimwear

Evolution of swimwear

From bathing dresses in the twenties to modern bikinis
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine