Barclays’ profits rise despite Libor scandal

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BARCLAYS said it was confident it will repair the damage caused by an interest rate rigging scandal that has rocked it and the banking industry after beating expectations with a £4bn profit.

“We are sorry for the issues that have emerged over recent weeks and recognise that we have disappointed our customers and shareholders,” said outgoing chairman Marcus Agius.

“I am confident we can, and will, repair the reputational damage done to our business in their eyes and those of all our stakeholders,” he added, reaffirming a commitment to deliver a return on equity of 13 per cent.

Barclays reported an underlying pre-tax profit of £4.2bn for the six months to the end of June, above an average forecast of £3.8bn from analysts polled by the company and up 13 per cent from a year ago.

The bank is searching for a new chief executive and chairman after they quit in the wake of a record £290m fine last month for rigging the Libor interest rate benchmark, sparking fierce criticism about its culture and risk-taking.

Mr Agius said the board was focused on filling those positions, but gave no update on likely timing.

Barclays’ investment bank fared better than most rivals in a tough second quarter, with income of £3bn up five per cent from a year ago and down 12 per cent on the first quarter.

But the bank is reviewing all parts of its investment bank, people familiar with the matter said, and the Libor scandal has intensified calls for it to shrink the business.

The bank also said it faces a bill of £450m to pay compensation to customers misled about interest rate hedging products to small businesses. The figure is based on initial estimates and Barclays said the ultimate cost is uncertain.

Britain’s financial regulator said in June banks had agreed to pay compensation to customers who were misled about the products.

Barclays said its statutory profits fell 71 per cent to £759m including the fine, interest rate mis-selling charge and movement in the value of its own debt.

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