Barclays made profits well in excess of what was expected in the first six months of the year after it released money it had set aside during the early days of the pandemic.
The bank said pre-tax profits soared to £5 billion, compared with the £4.1 billion that analysts had forecast.
The nearly four-fold increase from the same period last year came as Barclays released impairment cash – money it had reserved during last year’s uncertainty to cover the costs of loans that might turn bad.
Bosses had taken impairment charges totalling £3.7 billion in the first half of last year.
But on Wednesday they said the improving economic outlook that Barclays’ economists now predict will allow them to free up £742 million from the impairment pot.
As a result, Barclays was able to unveil a 2p-per-share dividend, higher than the 1.8p that had been expected.
The bank will also return money to investors by buying back up to £500 million-worth of its own shares from them.
Chief executive Jes Staley said: “This has been a strong first half, clearly demonstrating the benefits of our resilient and diversified universal bank in supporting the growth of capital markets, our corporate clients and retail customers.
“Our investment banking fees and equities businesses have delivered record income, and we are seeing encouraging signs of recovery in consumer banking.
“Our profitability, strong capital position and balance sheet have enabled us to increase capital distributions to shareholders.”
He added: “We have also demonstrated our ability, and willingness, to support customers and clients through the pandemic, and we are mindful that this support will need to continue as we see the pandemic subside.”
Barclays said its income across the group had dropped 3% to £11.3 billion as the euro and the dollar lost ground against sterling.
John Moore, senior investment manager at Brewin Dolphin said: “Barclays undertaking a further share buyback and upping its half-year dividend marks another step on the road to recovery for the UK’s major banks, and financial sector at large, from the dark days of dividend suspensions.
“The bank’s reduction in provisions for impairment charges, more positive outlook for its retail operation, and robust capital position will be welcomed by investors, but cost increases – whilst not significantly affecting these results – remain a threat in a low interest rate and net interest margin environment.”