Page last updated at 18:56 GMT, Tuesday, 10 November 2009

More profits at Barclays and HSBC

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Barclays' profits are down by 19%

UK banks Barclays and HSBC have both reported continuing profits, and indicated that the worst of their bad debts may be coming to an end.

Barclays made a pre-tax profit of £1.56bn in the three months to 30 September, down 45% from a year ago.

While HSBC did not give any figures, it said profits for the same period were "significantly ahead" of last year.

HSBC said its bad debts had now fallen to their lowest level since the second quarter of 2008.

Meanwhile, Barclays said the impact of its bad debts would peak sooner than first thought - at the end of 2009 or in the first quarter of 2010.

Mixed picture

For the nine months to 30 September, Barclays saw its pre-tax profit fall 19% from a year earlier to £4.542bn, after its charges for bad debt jumped 65% to £6.2bn.

Nils Blythe
Nils Blythe, BBC business correspondent

There's a gaping chasm in UK banking. On one side are Barclays and HSBC - both heading for hefty profits this year. On the other side are Lloyds and RBS which will probably record losses.

Takeover deals are one of the the main reasons for the chasm. RBS blew itself up by buying the Dutch bank ABN Amro at the height of the credit boom. Lloyds would have survived without being part nationalised if it had not taken over HBOS at the height of the credit bust.

By contrast, HSBC has managed to absorb the losses from its ill-judged purchase of a US sub-prime lender in 2002. And Barclays is making money from the remains of Lehmans it bought a year ago. But investors still have reason to be very cautious when banks buy other banks.

When other one-off factors were pulled out, the bank said its pre-tax profits before exceptional items totalled £4.4bn for the nine months, more than double a year earlier.

During the three quarters, the bank saw a marked difference in performance between its UK and overseas operations.

While its global commercial and retail banking units saw profits rise 11% over the nine months, profits at its UK retail business "decreased significantly".

Barclays chief executive John Varley said the results showed "the resilience and diversification" of the bank's portfolio of businesses.

Barclays also announced that it would restart dividend payments, paying an interim dividend of 1p per share.

Shares in Barclays closed down 5.1%, or 17.5 pence, at 325.35p.

'Solidly profitable'

HSBC said it was continuing to benefit from its wide global reach and cost-cutting.

It added that its strong trading update came despite economic conditions remaining "challenging".

It added that its global banking and markets unit was having a "record year", while its commercial banking division was "solidly profitable in all regions".

"Thanks to a highly diversified business model, a clear and unchanged strategy and a focus on banking fundamentals, HSBC continues to deliver broadly-based profits at this pivotal stage of the business cycle," said HSBC chief executive Michael Geoghegan.

He added that the bank was continuing to attract new customers.

HSBC's shares closed up 4%, or 27.8 pence, at 720p.

The latest results from Barclays and HSBC are in contrast to rival Royal Bank of Scotland (RBS), which last week reported a third quarter loss of £2.2bn.

Unlike RBS, both Barclays and HSBC have not needed direct financial support from the UK government.

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