Barclays' £1bn credit crunch hit
Updated on 15 May 2008
Barclays has revealed a further £1 billion loss on assets thanks to the credit crunch.
The banking giant suffered an overall hit of £1.7bn, with £700 million recovered through gains on the valuation of notes issued by the division.
The news came as Barclays announced first quarter profits down on a year ago, but did not disclose the extent of the drop.
It said trading in January and February had been broadly in line with a year earlier before tougher credit markets impacted its performance in March.
The trading update did not contain any comment on whether Barclays planned to follow Royal Bank of Scotland and Halifax Bank of Scotland and announce a cash call to shareholders in order to shore up its balance sheet.
Finance director Chris Lucas said the company was keeping all options open regarding possible moves to bolster its capital reserves: "We are not going to rule in or rule out anything at this stage."
In February, Barclays posted profits of £7.08bn for 2007, but disclosed a £1.6bn hit from the credit crunch and warned of "at least" another six months of turmoil.
It has reported solid income growth in UK retail banking during the first quarter, with good performances in current accounts and savings, while mortgage volumes were significantly higher despite tighter lending conditions.
Mr Lucas said the improvement reflected actions taken over the past 12 to 18 months to improve the quality of its mortgage book.
Bad debt charges increased slightly in UK retail banking, but remained low in mortgages, the company added.
Banks are under pressure from regulators to boost their balance sheets after incurring losses on securities backed by US mortgages.
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