Barclays, the UK's third-largest bank by market capitalisation, reported a 9 per cent increase in first-half profits as growth in its business banking and investment banking operations offset rising bad debt charges at its credit card unit.

In the six months to the end of June, pre-tax profits were £2.69bn (€3.87bn), up from £2.46bn in the same period of 2004, when adjusted for the introduction of international financial reporting standards (IFRS).

John Varley, chief executive, said the figures demonstrated the breadth of the bank's operations: "We are seeing a very benign set of conditions in the wholesale side of the business, and some growth in provisions on the retail side. But one of the benefits of the Barclays portfolio is that it is very diverse." Mr Varley said that, following the acquisition of Absa, the South African bank, one-third of Barclays' profits would come from outside the UK. Four years ago, that figure was only one-fifth, he said.

The Absa deal, which was completed last month, did not affect the first-half figures. Naguib Kheraj, finance director, said 95 per cent of Barclays' increased profits for the first six months of the year could be attributed to organic growth as a result of past investments.

As Barclays warned in a trading update this year, bad loan provisions increased. Across the bank, provisions rose 20 per cent to £706m. The increase was entirely because of Barclaycard, where provisions jumped 42 per cent to £508m.

However, Mr Varley stressed the growth of provisions was in line with overall lending operations. As a proportion of total loans, provisions were 0.51 per cent, down slightly from the end of last year.

In the UK, still Barclays' largest division, pretax profits rose 10 per cent to £1.28bn, driven mainly by growth in business banking.

In the retail bank underlying profits were up 6 per cent. - (Financial Times Service)