Chillin' out till it needs to be funded
The European Banks shattered a few myths in the stress tests but no one has really been fooled. HSBC has quit London, Lloyds has barely made its first profits and StanChart needs more capital with DB and BNP profits as those of Lloyds, much like everyone else depending on receding loan losses as liquidity returns to the market. But you must admit it is fun to watch a result that says $5.85 billions in profit in 6 months.
Barclays profits rose 44% but apart from the loan loss reserves, the cost to income ratio went up to 69% from 57% and revenue fell 15% as trading was restricted in the second quarter. The street pointed to Barclays’ untimely expansion in Barclays Capital as the primary cause of the debacle. BarCap revenu es were 33% down for the six months and 15% down Q-0-Q
Almost 900 million pounds or $ 1.35 bn profits were attributed on gains of valuation on its own debt, and 87% of the profits were from BarCap
Barclays chief executive John Varley claimed the bank was approving more loans than in 2009 – with an 85% approval rate versus 80%.
He said that, despite criticisms levelled at banks over lending, “the facts that we have seen paint a very different picture”.
“Loan applications have fallen steadily while approval rates – having been high in 2008 and 2009 – have gone higher in 2010,” he said.
The blue-chip banking giant said on an underlying basis, with gains on the value of its own debt stripped out, first half pre-tax profits rose 22% to £3 billion.
European Bank results, Bank results week