Pre-tax profits soared to £5 billion, compared with the £4.1bn that analysts had been expecting.
The nearly four-fold increase from the same period last year came as the group released impairment cash – money it had reserved during last year’s uncertainty to cover the costs of loans that might turn sour. Barclays had taken impairment charges totalling £3.7bn in the first half of last year.
Releasing its interim results, ahead of rival NatWest’s on Friday, Barclays said the improving economic outlook that its economists now predict will allow the bank to free up £742 million from the impairment pot.
As a result, the lender unveiled a 2p-per-share dividend, higher than the 1.8p that had been expected. It will also return money to investors by buying back up to £500m-worth of its own shares from them.
Chief executive Jes Staley told investors: “This has been a strong first half, clearly demonstrating the benefits of our resilient and diversified universal bank in supporting the growth of capital markets, our corporate clients and retail customers.
“Our investment banking fees and equities businesses have delivered record income, and we are seeing encouraging signs of recovery in consumer banking.
“Our profitability, strong capital position and balance sheet have enabled us to increase capital distributions to shareholders.”
He added: “We have also demonstrated our ability, and willingness, to support customers and clients through the pandemic, and we are mindful that this support will need to continue as we see the pandemic subside.”
The bank said its income across the group had dipped 3 per cent to £11.3bn in the first half as the euro and the dollar lost ground against sterling.
John Moore, senior investment manager at wealth management firm Brewin Dolphin, said: “Barclays undertaking a further share buyback and upping its half-year dividend marks another step on the road to recovery for the UK’s major banks and financial sector, at large, from the dark days of dividend suspensions.
“The bank’s reduction in provisions for impairment charges, more positive outlook for its retail operation, and robust capital position will be welcomed by investors, but cost increases – whilst not significantly affecting these results – remain a threat in a low interest rate and net interest margin environment.”
Gary Greenwood, an analyst at brokerage Shore Capital, noted: “Barclays has reported results that show profitability well ahead of expectations primarily due to a larger than expected net provision release during the period.
“In addition, the core tier 1 ratio has also come in above consensus which, combined with the better-than-expected profitability and an improving (albeit still uncertain) macroeconomic outlook, has given management the confidence to announce a slightly higher-than-expected interim dividend along with a further £500m share buyback.
“Overall, a very encouraging update which we expect will drive further consensus forecast upgrades and is therefore supportive of our positive stance.”