Debt consolidation loan

Roger Davis, chief executive of the U.K

Barclays is hiring more staff for its U.K. branches and investing in new technology to improve service and win business from competitors.

Roger Davis, chief executive of the U.K. business, plans to reduce its cost-to-income ratio, a measure of efficiency, by 2 percentage points annually for three years. The lender spent 66 pence of every pound in income at its U.K. retail business last year, up from 64 pence a year earlier, Barclays said.

``We see reasonable earnings growth despite the cost outlook outlined today,'' Richard Dunbar, fund manager at Scottish Widows Investment Partnership, which oversees $140 billion including Barclays stock, said in an interview from Edinburgh. ``We see reasonable value in these shares.''

Recruitment

Profit at Barclays Capital rose 11 percent in the second half. Chief Executive Robert Diamond who runs the investment banking unit added 2,000 employees in 2004, boosting its workforce to 7,800. The unit's ratio of costs to net revenue rose to 68 percent in the full year 2004 from 66 percent in 2003.

Barclays, which is also expanding outside the U.K. through acquisitions, is in talks to buy a controlling stake in Absa Group Ltd., South Africa's No. 4 lender by assets. The transaction may be worth $4 billion, based on Absa's market value. Barclays is still waiting for regulatory approval in South Africa, Varley said today. He declined to comment on when regulators might reach a decision.

In January, the bank also offered to buy ING Groep NV's French money management units, to gain 27,000 clients with assets of at least 50,000 euros ($64,000) to invest.

Barclaycard, which issued Europe's first credit card in 1966, this month agreed to start issuing credit cards with Swedbank AB in Norway and Sweden, where the average income is among the highest in Europe and there are relatively few cards in issue.

Margins

The expansion of Barclays's businesses outside Britain comes as lending profitability declines in its home market.

The bank's net interest margin, a measure of the profitability of lending, narrowed to 2.59 percent for the year, from 2.61 percent a year earlier. Competitors such as Edinburgh-based HBOS Plc and London-based Lloyds TSB are also cutting the rates they charge for personal loans and mortgages as demand for credit falls.

``Margins are probably going to come under pressure,'' said Stuart Fraser, investment director in London at Brewin Dolphin Holdings Plc, which oversees $28 billion. The results were ``a little flat on the retail side,'' he added.

Provisions for loan losses for the full year declined to 1.1 billion pounds from 1.35 billion pounds. That figure will rise to about 1.4 billion pounds as overall lending increases and the bank makes more credit card loans in the U.S., Finance Director Naguib Kheraj said on the conference call today.

Second-half profit was expected to rise to 1.52 billion pounds, according to the median estimate of nine analysts surveyed by Bloomberg. Bloomberg calculates second-half earnings by deducting first-half earnings from annual results reported today.

Annual net income climbed to 3.27 billion pounds, or 51 pence a share, from 2.74 billion pounds, or 42.1 pence a share. Annual profit was expected to rise to 3.24 billion pounds.

Source : Bloomberg - USA