Barclays said first-quarter profit rose 15 per cent as strong growth at its investment banking arm made up for a big jump in bad debts as economies worsen.

Trading in April had been "generally consistent with the overall trend for February and March after an exceptional January," the country's third biggest bank said yesterday.

Barclays made a January-March pretax profit of £1.37 billion. Profit at Barclays Capital jumped 361 per cent to £907 million, driven by growth in the United States after last year's acquisition of Lehman Brothers' US operations.

That echoed a strong start to the year by rivals including Goldman Sachs, Credit Suisse and BNP Paribas as banks benefit from a revival in capital markets activity after the torrid end to 2008, with many grabbing business where troubled rivals have retreated.

But Barclays said impairment charges and other credit provisions jumped to £2.31 billion from £1.29 billion. About half of that rise was due to growth and currency movements and half was due to a worsening economy and maturation of loans.

The bank said the loan loss rate would likely increase across all its business lines and it was assuming this year's annualised loan loss rate would be at the upper end of its indicated range of 1.3-1.5 per cent. The annualised rate was 1.31 per cent in the first quarter.

Net losses from credit market write-downs more than doubled during the quarter to £2.15 billion. Gross write-downs hit £2.61 billion, before hedges and gains on its own debt.

Banks across Europe and the United States have been battered for over two years by a financial crisis, and now face rising losses as home and corporate loans sour.

But Barclays and other bank stocks have soared in recent weeks as a recovery in capital markets has lifted optimism they could be through the worst and can avoid more dilutive fundraisings. Barclays shares have more than quadrupled in the past two months, closing at 288 pence on Wednesday.