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Barclays ups write-down to $3.1 bln, profits in line

Barclays Plc, Britain’s third-biggest bank, raised its 2007 write-down on the value of risky assets to £1.6 billion ($3.1 billion) but reported profits broadly in line with analysts’ expectations.

Pretax profit for 2007 was £7.08 billion, Barclays said on Tuesday, down from 7.14 billion in 2006 but just above an average forecast of 7.05 billion from a Reuters Estimates poll of 21 analysts. Underlying profits rose 3% excluding the sale of businesses that boosted 2006 earnings. By 0820 GMT Barclays shares were down 3% at 447 pence, alongside a weak European bank sector after a big write-down from Credit Suisse.

Analysts said Barclays’ results were resilient, and its price dip was partly due to a 7.6% rally on Monday. “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.” Profits at BarCap -- Barclays Capital, its investment bank arm -- rose 5% to a record £2.34 billion.

US slowdown
Barclays said it benefited from its diversity and had coped well with credit market turbulence in the H2 of 2007. “Our performance in 2007 gives us a lot of confidence,” John Varley, CEO, told reporters on a conference call. “The market threw pretty much everything it could do at the capital markets businesses and you can see the results that Barclays has generated.” Varley said BarCap had seen “good performance on the income line” in its capital markets businesses in the first weeks of 2008. Bob Diamond, head of BarCap, said “very difficult and challenging market conditions” would continue for the next six months, but he predicted a US economic slowdown would be “shorter and shallower” than the consensus forecast. The threat of further write-downs would largely depend on economic and market conditions, he said, adding he was comfortable with the risks facing the bank. Losses arising from credit-market turbulence were £1.64 billion last year, net of gains from the valuation of issued notes of £658 million.

Barclays had previously announced a £1.3 billion net write-down on assets linked to US sub-prime mortgages, which included 400 million in gains on valuation of notes. The bank lifted its final dividend to 22.5 pence per share, raising its full-year payout to 34 pence, up 10% from 2006 and just ahead of a Reuters Estimate average forecast of 33.7p. (Reuters)