StockMarketWire.com - Banking group Barclays reported a large rise in first-half profit driven by a drop in credit impairment charges as the economy recovers.

Pre-tax profit for the six months through June jumped to £4.98 billion, up from £1.27 billion year-on-year.

Credit impairment releases fell to £742 million, down from £3.79 billion, more than offsetting a 3% drop in income to £11.36 billion pinned on currency headwinds.

Barclays declared an interim dividend of 2p per share, compared to no payout year-on-year.

The bank, having completed a £700 million share buyback in April, said it would initiate a further buyback of up to £500 million.

For the full year, Barclays said it expected to deliver a return on tangible equity above 10%.

It added that its quarterly impairment run rate was expected to remain below historical levels in coming quarters, given reduced unsecured lending balances and the improved macroeconomic outlook.

Costs for the full year were expected to rise, due to higher structural cost actions, including a real estate charge, and higher performance costs, reflecting improved returns.

'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,' chief executive James Staley said.

He noted that the company's investment banking fees and equities businesses had delivered record income and that it was 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,' Staley said.

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