The banking giant’s profits for the six months to June 30 fell by more than expected – down from £4.9 billion a year ago – after it revealed a £1.5 billion estimated cost impact from the debacle in its structured products division.

Barclays also said it put aside £165 million for a potential fine for the error, which saw it sell more structured notes than it was allowed to under US rules, and is being scrutinised by regulators.

The group said that, net of tax, the bottom-line charge relating to the US trading saga stood at £581 million, of which £341 million was taken in the second quarter.

Barclays has reported a 24% drop in half-year profits to £3.7 billion after taking a mammoth hit from a US trading blunder and a charge to cover loan losses in the cost-of-living crisis.

The lender also revealed it put by £341 million for potential loan losses as the economic outlook has weakened due to soaring inflation.

Barclays chief executive CS Venkatakrishnan said: “We are alert to the pressure that the rising cost of living will have on our customers and colleagues.

“We have a range of measures in place to help and are looking to do more.

“With our resilient income growth and balance sheet strength, we can provide that support while distributing excess capital, having announced a half-year dividend of 2.25p per share and an intention to initiate a further share buyback of £500 million.”

The group warned that its annual costs are set to rise to around £16.7 billion, up from previous guidance for £15 billion, as a result of the US structured notes error and a weaker pound against the US dollar.

But, in spite of the charges, Barclays said it will pay out a dividend of 2.5p per share and launch a buyback of £500 million.

Barclays reports a 24% drop in half-year profits to £3.7 billion