Barclays profits slide 38 pc, flags job cuts

Earnings after tax dived to £1.50 billion ($2.44 billion, 1.72 billion euros) in the six months to June, compared with £2.43 billion in the same part of the previous year, the bank said in a results statement.

Profits sank sharply as investment division revenues fell and after the group set aside £1.0 billion to compensate clients who were mis-sold credit insurance.

Market expectations had been for net profit of £1.31 billion, according to analysts polled by Dow Jones Newswires.

Barclays added in the statement that it had axed 1,400 jobs during the first half of the year.

Chief Executive Bob Diamond, talking to reporters on a conference call, indicated that this trend was likely to continue in the second half. That would give approximately 3,000 job losses over the entire year.

"You should assume this trend to continue and increase somewhat," Diamond said.

Pre-tax profit meanwhile sank 33 per cent to £2.64 billion, compared with £3.95 billion last time around.

However, stripping out the £1.0-billion provision, Barclays said its interim pre-tax profit rose 24 per cent to £3.68 billion, boosted by lower bad debt charges.

Impairment charges and other credit provisions dropped 41 per cent to £1.83 billion.

Group income stood at £15.24 billion, little changed from £15.73 billion the previous year but income at investment banking arm Barclays Capital was down 11 per cent at £6.26 billion.

"I am pleased with the progress made across Barclays in the first half," Diamond said in the earnings release.

"We have delivered underlying profit before tax up 24 per cent ... despite a lacklustre economic environment in many of our major markets which impacted income generation.

"Our operating expenses have been tightly controlled while we have continued to invest in selected growth initiatives in a number of our businesses."

Barclays said in May that it would set aside £1.0 billion after British banks lost a high court appeal against tighter regulation of so-called payment protection insurance (PPI).

British banking rival HSBC kicked off the first-half results season on Monday with its net profit soaring 35 per cent to $8.9 billion on lower bad debt and tax charges. The global giant also outlined plans to slash 30,000 jobs worldwide over the next two years.

However, HSBC announced on Tuesday that it would hire about 15,000 people in emerging markets by 2014 as it particularly looked to Asia's booming financial sector to power future growth.