Barclays H1 profits surge to £4.5bn but bad loan charges rise

Bank unveils £750m share buyback, but results disappoint

Barclays became the second bank to post surging profits on the back of higher interest rates and lift its provisions for bad loans.

The bank posted a 22% rise in pre-tax profit for the six months to June 30 to £4.5bn, while bad loan charges increased to £900m from £341m. Barclays also announced a £750m share buyback deal, up on the £500m completed earlier.

Net interest margin – a key metric charting the difference between loan and savings rates, soared to 3.2% from 2.67% as savers continued to receive feeble returns on their deposits amid mounting accusations of “profiteering” in the sector.

Barclays said it now expected NIM to be less than 3.20%, with a current view of around 3.15%.

Income at the investment bank fell 22% to £3.2bn in the second quarter as trading in bonds and shares tumbled.

Chris Beauchamp at IG Group, said: “Once again the prospect of reduced interest income has hit banks, with Barclays in the firing line this morning. Even a buyback scheme and a solid rise in profits have not cheered investors, and while the shares are still up 20% from their March lows it seems today’s results have not gone down well.”

Reporting by Frank Prenesti for Sharecast.com