Barclays has failed to arrest the spiralling cost of personal loan and credit card defaults. After heavy knocks at Barclaycard in the first half, it appears today that the second-half will be no better.
Full-year profits will still hit £7 billion, thanks to a flourishing Barclays Capital, which is focused on corporate rather than individual debt, and signs of a long-hoped for turnaround at the retail bank.
Like its peers, Barclays is suffering from the stellar growth in Individual Voluntary Arrangements (IVAs), which avoid bankruptcy and can wipe out up to 75 per cent of an individual’s debt in exchange for an agreed monthly contribution.
This is bad news for the high street banks. Barclays has taken steps to stop people falling into debt, and arrears, but the longer-term costs of the new insolvency rules are more difficult to alleviate.