One of the major banks Barclays, has just reported that they showed a profit of £3.95 billion in the first six months of 2010, a rise of about 44%. Both of the large rival banks, Lloyds and HSBC, also reported significant profits. The profits shown are chiefly the result of a drop in bad debts for all of those banks.
Barclays Bank realized a large majority of their gains from their Barclays Capital arm, which is the investment branch of the organization. The profits exceeded expectations, as analysts had predicted about £3.4 in profit for that period, but shares in the bank fell by about 3% as the numbers indicated a slowdown in BarCap activities.
John Varley, chief executive of Barclays, said that the bank was approving more loans in 2010 than previously, with an approval rate of 85% as opposed to 80% in 2009. In response to criticism about the bank’s overall lending rate, he said that there have been fewer applications for consideration.
Spain is still a problem for the bank, with a large amount of bad debts still on the books.
There was a £433 million increase in losses on corporate loans in that country, partly due to the falling value of real estate. However, even with this loss, Barclays’ overall bad debt ratio fell to £3.0008 billion, a drop of about 32%. The bank expects bad debt losses to continue dropping during the year, but analysts say the forecast is uncertain.