Barclays reported a better-than-expected 37 per cent rise in half-year profits today as a buoyant performance by its investment banking arm countered a big rise in bad debts.
Britain's third-biggest bank said it made a pretax profit in the first half of 2006 of £3.67 billion (€5.4 billion), beating market forecasts.
But the bank's bad debt charges jumped by a half to £1.06 billion, largely due to British consumers having a harder time paying up on loans to its Barclaycard credit card unit, where earnings fell 14 per cent.
A sharp rise in bad debts had been expected, and UK retail banking rivals HSBC, HBOS and Lloyds TSB have all reported higher impairment charges this week, taking the shine off otherwise strong profit growth.
Barclays said it expects retail credit conditions to remain challenging in the second half as bad debts continue to be affected by increases in debt and personal bankruptcies.
It said there were some signs of stabilisation, although a tighter lending policy would not have a big impact this year.
Barclays is attempting to revive its UK retail bank and said in June it would close up to 200 branches as it consolidates its Woolwich and Barclays branches.