Barclays profit falls on write-downs

Barclays, the country's third-biggest bank, raised its 2007 write-down on the value of risky assets to £1.6 billion pounds but reported profits broadly in line with analysts' expectations.

Barclays is the first big bank to report earnings after a turbulent year and analysts said yesterday's numbers - including a lower-than-expected £300 million increase in write-downs and a 10 per cent dividend rise - were good news for the sector.

"Overall, the numbers came in broadly in line with our expectations and consensus, and that's a relief," said Mamoun Tazi, analyst at MF Global. "BarCap performed in line despite the write-downs, which highlights the fact the underlying business is very strong."

Barclays reported a 2007 pre-tax profit of £7.08 billion, down from £7.14 billion in 2006 but just above an average forecast of £7.05 billion from Reuters Estimates. Underlying profits, which exclude sales of businesses, rose three per cent.

The bank said it is confident it knows where its risks are and is comfortable with the current levels of write-downs, but its shares were still hit by a surprise near $3 billion write-down at Credit Suisse that showed markets remain tough and exposures can change quickly.

Profits at Barclays Capital, its investment bank arm, rose five per cent to a record £2.34 billion, above expectations.

Banking was in line with expectations and both retail banking and Barclaycard, where profits rose 18 per cent, benefited from a drop in bad-debt charges, although there was a jump in impairments on US subprime mortgages.