The bank said adjusted pre-tax profits for the period were £3.35bn as earnings from its troubled investment arm - which is undergoing thousands of job cuts - slumped by 46 per cent to £1.06bn.
It revealed that the impact of the PPI mis-selling scandal, which has dogged major lenders and seen them set aside billions to cover compensation schemes, refused to go away.
Barclays took the size of its PPI provision pot to nearly £5bn after adding £900m “as a result of the lower expected decline in claims”. The sum topped up the existing £3.95bn fund.
The bank said it had seen an increase in cases from claims management companies in the second quarter of this year and that these were only 39 per cent lower than at the peak in May 2012 - with direct customer claims down 69 per cent.
Meanwhile, Barclays said overall profits were also hit by currency movements.
But it said there were improvements for personal and corporate banking as well as its non-core division housing billions of assets it wants to sell or run down.
Chief executive Antony Jenkins said the group was making “encouraging progress” on its plan to “simplify, focus and rebalance the group”.
Shares rose 3% following the half-year results today.
Finance director Tushar Morzaria said Barclays was undergoing a “transition year” but that it was on target and ahead of plan in all its business units.
Its personal and corporate banking division, which includes personal banking and mortgages, cut bad loan charges “due to the improving economic environment in the UK”, Barclays said.
There were lower write-offs on overdrafts and home loans and more corporate recoveries, the bank reported.
Barclays said it advanced £2.3 billion in net mortgage lending in the first half of the year and £900 million of gross lending to small businesses.
Mr Jenkins said staff numbers across the group were now at their lowest level since 2007. It follows thousands of job cuts since that time, with more to come.
Announcements by the bank this year have set out plans for a total of 19,000 jobs to go by 2016.
Meanwhile, Barclays disclosed in today’s report that it had extended part of a “non-prosecution agreement” with the US Department of Justice, giving the authority more time for its probe into claims of foreign exchange rigging.
Shore Capital analyst Gary Greenwood said the results were ahead of expectations, while Mike Trippitt of Numis said investment bank revenues were better than feared.
Richard Hunter, head of equities at Hargreaves Lansdown stockbrokers, said: “It would appear that Barclays is riding the wave of a recovering UK economy, whilst its strategy to streamline the business is also beginning to reap some rewards.
“However, overall income and adjusted profits slipped, largely driven by difficulties within the Investment Bank. The additional PPI provision is an unwelcome surprise and the company’s assertion that 2014 is a year of transition is little different from the preceding few years, which have also fallen into that category for various reasons.
“In addition, there are separate regulatory investigations continuing which could have detrimental financial and reputational effects.”