Barclays posts flat profit of £7bn

by Gill Montia

Story link: Barclays posts flat profit of £7bn

Barclays has recorded pre-tax profit of £7 billion for 2007, a 1% decrease on 2006.

Barclays Capital, the bank’s investment arm, recorded writedowns totalling £1.6 billion for the year, on loans connected to the US sub-prime mortgage crisis.

Despite the charge, Barclays Capital reported a 5% increase in pre-tax profit, to £2.3 billion.

Profit at the bank’s international retail and commercial business fell 23%, to £935 million.

The decline has been attributed in part to last year’s results including profits on certain disposals.

The result was also affected by a 12% fall in the average value of the South African rand.

John Varley, Barclays’ chief executive is predicting a difficult 2008. Anticipating a slowdown in world economies, he stated: “In particular, we expect economic growth in the UK and the US to be below the trend of recent years.”

Bob Diamond, the bank’s president says he expects there to be a “two to three-year workout in terms of sub-prime”.

Barclays has raised its dividend by 10%, to 34p, but shares fell slightly this morning.

The bank is the forerunner of Alliance & Leicester and Lloyds TSB, which will report their 2007 figures later this week.