LONDON(AP) - Britain's Barclays PLC saw its profits fall by a third in the first half of the year as the bank's earnings were hit by a charge related to the mis-selling of products to customers.
But Barclays shares remained steady, up 0.6 percent at 218.25 pence (US$3.55) as analysts said the results showed steady progress.
Chief executive Bob Diamond insisted that the bank's capital, liquidity and funding position is "rock solid."
But Diamond also said the bank had cut 1,400 jobs this year and that more were to come.
"You should assume this trend to continue and increase somewhat," he said.
Diamond added the economic conditions across Europe would remain challenging until at least the end of the year.
Richard Hunter at Hargreaves Lansdown stockbrokers said the results "reflect steady progress towards the bank's medium term goals." He said the group's investment banking unit would have a weak second half of the year, but said the bank's underlying financial strength had improved.
The bank said Tuesday that first half net profits fell 38 percent to 1.5 billion pounds ($2.4 billion). Profits were dented by a 1 billion pound charge set aside to compensate customers for mis-selling them some financial instruments, and losses on acquisitions and disposals. It maintained its dividend at 2 pence a share.
British banks, including Barclays, could be forced to pay customers billions of pounds in compensation over the mis-selling of payment protection insurance that was supposed to cover the repayment of people's loans if they experienced a fall in income because of illness or job loss. Barclays has set aside one of the largest funds to pay possible compensation claims.
The industry has been accused of mis-selling the policies on a wide scale, raking in profits as many customers were unaware they were even paying for them - or could ever have claimed on the policies.
Barclays said that without the provisions for PPI compensation claims, pretax profits at its retail and business banking units worldwide would have risen 33 percent to 1.446 billion pounds. Instead, they fell 63 percent to 446 million pounds.
Its corporate and investment banking division saw profits before tax fall by 22 percent, hit by losses on acquisitions and disposals. Pretax profits at its wealth and investment management business fell 36 percent.
Barclays and other British banks are bracing themselves for new regulations when Britain's Independent Commission on Banking - a government backed body - publishes its report on ways to reform Britain's banking sector in September. Britain's chancellor George Osborne has said the report will force banks to separate their retail operations from their more volatile investment banking. The move is intended to help prevent a repeat of the financial crisis of 2008 and to keep banks from becoming too big to be allowed to fail.
Diamond said in his statement that "a final regulatory outcome will provide a clearer backdrop against which we can judge how much we continue to invest in our business and in the broader promotion of economic growth, versus how much we retain in higher levels of capital, or distribute to shareholders by way of a dividend."