Profits leap 20% at Barclays

PROFITS at Barclays leapt 20%, boosted by its booming investment banking business. However, despite making £4.6bn in 2004, or £9,000 a minute, the UK's third largest bank can deflect some of the criticism that it is has onced again cashed in on British consumers - its results revealed a slight fall in earnings from its High Street branches.

Earnings at the company's investment bank Barclays Capital rose 25% to £1.04bn, bouyed by an on-going recovery in global stock markets.

The results were slightly ahead of analysts expectations of around £4.57bn. However, Barclays shares fell 13p to 581p in early trading.

Money made from the company's 14m individual British customers slipped from £1.14bn to £1.13bn. 'We have been investing heavily in front-line people, in infrastructure, and in branch-based technology,' said John Varley, chief executive.

'We are looking for these investments to bear fruit during 2005. The best fruit, of course, will be rising customer satisfaction among retail customers driving further growth in business flows.'

But he added: 'I don't like the fact a big business has had flat profits growth year on year.'

Despite the weak performance, the bank strengthened its position as one of the big four banks in Britain. The number of current accounts rose 10.5m to 10.7m while there was a rise in savings accounts from 10.3m to 10.6m.

The company said average overdraft balances for personal customers increased by 9% while the amount in deposit accounts rose only 5% to £68.5bn, reflecting the trend last year for people to spend rather than save.

{2}Barclaycard, which relaunched last June with a 0% for 12 months amid some criticism from consumer groups, saw profits rise 5% to £801m from £761m. Its customerbase rose to 11.2m from 10.6m.

The company said profit growth at the division was 'muted' because last year's interest rate increases had knocked appetite for borrowing. It also blamed the extra costs of investment in growing the UK customer base and in developing Barclaycard International.

'Barclays had a record year, with strong profit growth across the group,' said Varley. 'The combination of income momentum and accelerated investment during 2004 creates a good platform for future growth.'

Banks have been criticised by consumer advocates for exploiting their dominance of the High Street.

Although Barclays' profits appear large in comparison to many other UK firms, they are likely to be dwarfed by those of NatWest owner Royal Bank of Scotland, which is expected to unveil a surplus of £7.93bn.