Credit crunch hits Barclays

BARCLAYS said profits fell in the first quarter of the year after the bank took a £1 billion writedown on assets tarnished by the credit crunch.

The country's third largest lender said the writedown for its investment arm Barclays Capital was net of a £700 million gain on the fair valuation of debt it carries on its own books. However, the writedown was less than that which other banks suffered.

It expects its core tier 1 capital ratio be slightly lower at the end of June than the 5.1 per cent it reported at the end of last year, but intends to lift it to its 5.25 per cent target.

"Our 2008 performance continues to benefit from the diversification of our business in recent years," chief executive John Varley said.