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Barclays profit down 33% on writedown

Barclays reported a 33% drop in H1 profits as it took a £2 billion writedown on the value of risky assets, but the profit drop was not as steep as expected.

Britain’s third biggest bank said on Thursday its pretax profit in the six months to the end of June was £2.75 billion, down from £4.1 billion a year before. The average forecast was for profits of £2.63 billion, from a poll of 7 analysts. Half-year profits at Barclays Capital fell 68% to £524 million, as it absorbed a 1.98 billion writedown on its credit market exposures, net of 852 million on the debt it carries.

BarCap had estimated a £1 billion net writedown for the Q1 and wrote down a net £1.6 billion last year. It has been criticized for not marking down its assets as much as most rivals. It has said its assets are higher quality. The bank said its total charge for bad debts and other credit provisions was £2.45 billion in the half, more than double £959 million a year before.

The bank said the outlook will remain difficult. “It would be wrong ... to suggest that the market conditions over the foreseeable future will be anything other than tough,” said CEO John Varley, citing slowing economies around the world. He said in some areas “it may take quite some time” for volumes to return to past levels. (Reuters)