Barclays edges down

August 2, 2001 Posted: 0926 GMT

LONDON (CNN) -- Barclays, the UK's fourth-largest bank, saw net profit fall narrowly amid growing competition after its takeover of mortgage bank Woolwich.

The bank said on Thursday first-half net profit to June 30 edged down 1 percent to £1.30 billion, or 78.6 pence per share, from £1.32 billion, or 88.9 pence a share, in the same six months of 2000.

Pretax profits on a pro-forma basis - as if the takeover of Woolwich had already taken place on January 1 last year - rose 4 percent to £1.92 billion from £1.84 billion a year ago, in line with expectations.

"Our position remains unchanged: the outlook gives us cause for caution but not alarm," said Chief Executive Matthew Barrett. "Whatever the outcome, we have achieved our momentum without compromising on our prudent, forward-looking approach to risk."

Barclays outperformed its closest rival Lloyds TSB (LLOY), the UK's third-largest bank, which posted a 12 percent fall in first-half net income on July 27, citing cut-throat competition in UK financial services.

Barclays said provisions for bad debts rose by 25 percent to £498 million in the half-year from £376 million. The company also took a charge of £81 million for restructuring as it integrates Woolwich, which it agreed to buy on August 11 last year.

Operating income outpaced costs as it rose 11 percent to £5.6 billion compared with a 6 percent rise in costs for the first-half to £2.9 billion.

Barclays Capital, the bank's debt arranging business, posted the biggest rise in profit, as net interest income rose 23 percent to £312 million compared with £253 million a year ago.

Barclays said net fees and commissions rose 11 percent overall to £1.78 billion, with strong performances from personal finance and the Barclaycard credit card unit.

"The Woolwich acquisition is proving to be even more valuable than we originally expected, and we are on course to deliver, by end-2003, annual pretax synergies of £400 million, versus the £240 million we indicated at the time we announced the transaction," Barclays said.

Banking consolidation in the UK is already complete after antitrust regulators last month blocked Lloyds TSB's bid for the Abbey National mortgage bank, meaning that Barclays would have to look to Europe if it wants to grow.

Barclays shares (BARC) fell 0.7 percent to 2,065 pence in London trading after the results were announced.

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