Barclays banks £3.6bn profits

BANKING giant Barclays today unveiled a 35% increase in bad-debt provisions to £1.15bn but distanced itself from trouble spots such as Argentina and Enron.

'Our policy is to tell the market if there is anything happening in our loan book that would make a material difference. You can take comfort from the fact that nothing specific is mentioned,' said chief executive Matt Barrett.

Barrett said the surge in provisions reflected increased caution about corporate and personal customers and growth in the business.

He was, however, in jaunty form as Barclays delivered a 9% rise in 2001 pre-tax profits to £3.6bn. 'We feel pretty good. We are in pretty good shape and we are cautiously optimistic about 2002. There is a more encouraging economic outlook for Britain, the US and the eurozone,' he said.

The bank believes Britain's economy will grow 2.2% this year, a more ebullient forecast than the consensus. Barrett is concerned, however, about the manufacturing sector and consumer spending.

Barclays is keen to grow overseas and is focusing on Europe. 'We see an opportunity to be an aggressive player in Europe and we have the platform to do that organically. We would be happy to undertake a valuecreating acquisition but we don't feel compelled to do so,î said Barrett.

Operating income rose 11% to £11.4bn and expenses were up 8% to £6bn. Some analysts criticised the cost growth but finance director John Varley said: 'We don't feel complacent about costs but they are growing more slowly than income and that is the most important thing.' Barclays core personal banking business's profits rose 18% to £498m and Barclaycard profits soared 20% to £555m. Barclays Capital, the investment banking arm, delivered strong profits growth of 19% to £685 million and asset management arm Barclays Global Investors saw profits up 20% to £71m.

Business banking profits rose just 5% to £1.2bn and the bank hopes the Government's forthcoming report on business banking will not recommend any dramatic changes to current practice.

Chairman Sir Peter Middleton took the annual results opportunity to take a potshot at regulators. 'Higher and growing costs of compliance with regulation are a key issue for the financial services industry,' he said.

The dividend is 15% ahead at 66.5p and the shares are to be split into four to make them more manageable.