Barclays ease worries over credit squeeze

Banking giant Barclays today gave a reassuring update on the performance of its investment banking arm during the recent credit squeeze.

The group said September profits at Barclays Capital were “substantially ahead” of July and August, with the performance in the year to date also strong.

Ahead of scheduled investor meetings, Barclays president Bob Diamond said in a trading update that he expected Barclays Capital’s record of profitable trading to continue for the rest of 2007.

Barclays Capital has delivered impressive growth for the banking group in recent years, including a 33% increase in half-year profits to £1.66bn (€2.38bn) in the first six months of the year.

Areas such as commodities and foreign exchange trading have helped it at a time of tougher conditions in corporate lending.

Shares remained in negative territory today, despite the positive update.

David Buik, of Cantor Index, said: “This was encouraging news from Bob Diamond that profits through September were well ahead of last year. This augurs well for the future.

“With so much to look forward to in the Far East, at home and in South America and South Africa, surely it should be up and up from here on in.”

Mr Diamond also said the performance of Barclays Wealth and Barclays Global Investors in the year through to September had been strong, with income and profits well ahead of last year.

Barclays has been left to concentrate on its trading performance after conceding defeat in its battle with Royal Bank of Scotland for ABN Amro.