Barclays chief apologises for results and shares slump

BARCLAYS yesterday struck a marked note of contrition as it reported an "acutely disappointing" 33 per cent fall in first-half profits.

John Varley, chief executive of Britain's third largest bank, even went as far as to apologise to shareholders for his company's recent stock-market performance.

Adopting a different tone from that of rivals, who have put a brave face on bad results, Varley admitted that shareholders – who have seen the value of their holdings drop 44 per cent this year – had "endured a lot". And he used the publication of the half-year figures to promise that the bank's board would improve the position in the future.

Varley's apology came as he revealed a further £2.5 billion in write-downs related to the credit crunch and subprime lending.

He said: "We are, and we will be, working as hard as we can to create the conditions that enable a higher price to be placed on our shares over time."

Barclays was the latest in a string of British banks to report a fall in interim profits yesterday, with pre-tax profit coming in at £2.75bn, down a third from £4.1bn in the same period last year.

Despite a warning from Varley that it was unlikely that "market conditions over the foreseeable future will be anything other than tough", shares in Barclays climbed 6p to a ten-week high of 375p, with analysts having feared profits could have been as low as £2.6bn.

Barclays Capital, the investment banking division that had previously fuelled strong growth at the company, was the worst-performing division, with profits plunging 68 per cent to £524 million.

Varley maintained that Barclays did not need to raise additional capital beyond the £4.5bn it raised earlier this year.

There had been speculation that Barclays may attempt to buy an investment bank to increase the scale of Barclays Capital, but Bob Diamond, who heads the business, said yesterday that was "unlikely".

"It's as tough an environment as I have seen in 25 years in the business," Diamond said, predicting no swift return to the growth of recent years.

One of Britain's highest paid executives, Diamond reportedly received £18.5m in salary and bonuses in 2007, but with much of the package based on Barclays' earnings per share performance, this is likely to tumble in 2008.

Barclays did show some bright spots yesterday, with its share of the new mortgage market in the UK jumping from 6 per cent to 26 per cent. The bank maintained its 11.5p interim dividend.