Barclays profit tumbles

London - British bank Barclays said on Tuesday its first half net profit slid 38% as investment division revenues fell and after it set aside £1.0bn to compensate clients who were mis-sold credit insurance.

Earnings after tax dived to £1.50bn in the six months to June, compared with £2.43bn in the same part of the previous year, the bank said in a results statement.

Market expectations had been for a net profit of £1.31bn, according to analysts polled by Dow Jones Newswires.

Pre-tax profit sank 33% to £2.64bn in the first half, compared with £3.95bn last time around.

However, stripping out the special provision and other exceptional items, pre-tax profit rose 24% to £3.68bn as lower bad debts boosted the lender.

Impairment charges and other credit provisions dropped 41% to £1.83bn.

Group income meanwhile stood at £15.24bn, little changed from £15.73bn the previous year but income at investment banking arm Barclays Capital was down 11% to £6.26bn.

"I am pleased with the progress made across Barclays in the first half," Chief Executive Bob Diamond said in the earnings release.

"We have delivered underlying profit before tax up 24% ... despite a lacklustre economic environment in many of our major markets which impacted income generation.

"Our operating expenses have been tightly controlled while we have continued to invest in selected growth initiatives in a number of our businesses."

Barclays said in May that it would set aside £1.0bn after British banks lost a high court appeal against tighter regulation of so-called payment protection insurance (PPI).