Slow quarter saps Barclays profit

Incoming chief executive Bob Diamond was faced with a further fall in business at the investment bank unit that he currently runs

Barclays has reported a small rise in underlying profits in the latest quarter as business continued to slow.

Total profits for the third quarter were £1.27bn ($2.03bn) before adjusting for the rising market value of Barclays debts, up 8.5% from the previous quarter, but down 28% from a year ago.

Net of this “own credit charge” effect, profits before tax were only £327m.

Gross income of £7.4bn – a measure of overall business – was down 4.5% from the quarter before and 9.5% from 2009.

The fall in business was led by a 24% year-on-year drop in top level income at the firm’s investment bank, Barclays Capital, according to the UK company’s statement.

While Barclays Capital saw fees from advisory work holding up well, revenues at its various capital markets sales and trading business lines continued to sag.

However, the Barclays group overall benefited from a reduction in losses on its existing loans portfolio.

Total impairments of £1.22bn in the quarter were down 23% from the previous three months, and down 27% from a year ago.

“Our income and profit performance was resilient for the first nine months of 2010, despite a subdued economic environment and moderate volumes,” said current chief executive John Varley, who will make way for the current head of Barclays Capital, Bob Diamond, in March.

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