Barclays raises its writedown to $3.1 bn

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London, Feb 19: Barclays Plc, Britain’s third-biggest bank, raised its 2007 writedown on the value of risky assets to 1.6 billion pounds ($3.1 billion) but reported profits broadly in line with analysts' expectations.

Barclays is the first big UK bank to report earnings after a turbulent year and analysts said Tuesday’s numbers – including a lower-than-expected 300 million pound increase in writedowns and a 10% dividend rise – were good news for the sector. “Overall, the numbers came in broadly in line with our expectations and consensus, and that’s a relief,” said Mamoun Tazi, analyst at MF Global. “BarCap performed in line despite the writedowns, which highlights the fact the underlying business is very strong.”

Barclays reported a 2007 pretax profit of 7.08 billion pounds, down from 7.14 billion in 2006 but just above an average forecast of 7.05 billion from Reuters Estimates. Underlying profits, which exclude sales of businesses, rose 3 percent.

The bank said it is confident it knows where its risks are and is comfortable with the current levels of writedowns, but its shares were still hit by a surprise near $3 billion writedown at Credit Suisse that showed markets remain tough and exposures can change quickly. At 1003, Barclays was down 1.6 percent at 452.5p, after a 7.6 percent rally on Monday, valuing it at 28 billion pounds. Profits at Barclays Capital, its investment bank arm, rose 5 percent to a record 2.34 billion pounds, above expectations.

UK banking was in line with expectations and both retail banking and Barclaycard, where profits rose 18 percent, benefited from a drop in bad-debt charges, although there was a jump in impairments on U.S. subprime mortgages.