Barclays has set aside an extra £600m to meet compensation claims for mis-selling of payment protection insurance (PPI) in the third quarter.
The sum exceeds analysts' estimates of an extra £500m for the three months to September 30 and brings the total provision over the past two quarters to £1bn, after £400m was put aside in the second quarter.
The banking industry's PPI bill already stands at more than £30bn.
The Financial Conduct Authority (FCA) has put a June 2019 deadline on claims in an effort to draw a line under what has been one of the biggest banking scandals in history.
In an update, Barclays reported a forecast-beating rise in third quarter profits to £1.7bn as it followed US peers in reporting a bumper quarter for its investment banking business.
Barclays' group pre-tax profits for the three months to the end of September, excluding notable items, rose from £1.4bn a year ago and was above the average analyst forecast of £1.3bn.
The performance was driven by improved investment banking results, with profits up 40 per cent overall following stronger returns from the trading division.
Chief executive Jes Staley said: "The growing momentum in attaining our strategic goals means we can feel optimistic of our prospects of completing the restructuring of Barclays."
Morgan Stanley and Goldman Sachs both saw profits for the third quarter rise by more than 50 per cent, largely from the surge in bond trading as investors fret over monetary policy around the world.
Barclays also benefited from earning the majority of its investment banking revenues in the US, since the dollar has appreciated in value against the pound in the aftermath of Britain's vote to leave the European Union.
The bank said it is on track to close its non-core unit in 2017 and said costs are under control and on target.