Profits maybe down, but Barclay's remains preferred bank

Following today's announcement from Barclay's Bank that profits are down by a third, Graham Spooner, Investment Adviser at The Share Centre, comments on the results and indicates how investors may benefit.

"Barclays has today announced a 33% drop in profits for the first six months. The bank has been hit by the continuing economic slowdown and has suffered £2.45bn of credit crunch write-downs. Barclay's first half profits of £2.75bn have plummeted significantly compared with £4.1bn for the same period last year.

"Company chief executive, John Varley sited the profit decline as being ‘acutely disappointing' and stated the market conditions over the last 12 months as being ‘as difficult as anything we have experienced in many years.'

"Barclay's has, however, weathered the storm better than Lloyds TSB and HBOS, both of which revealed slumps of 70% and 72% respectively. And more importantly for investors, the bank is continuing to pay its dividends in cash as opposed to shares like some of its competitors.

"Despite Barclays drop in profits, it remains one of our preferred banks for contrarian investors, taking a longer term view. Investors should remember Barclay's has international operations as well as a large trading arm, Barclay's Capital. This is an important part of Barclays's business and although it may be suffering while the markets are down, if and when they pick up we would hope to see a big improvement in the banks profits.

"However, those investors who are more cautious may wish to remain on the sidelines, in view of the continuing bleak economic news."