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Investment banking helps HSBC and Barclays to post huge half-year profits

HSBC and Barclays bank have posted combined half year profits of almost £6bn thanks to their investment banking arms.

Both the Federation of Small Business (FSB) and the British Retail Consortium raised concerns over the cost of lending to vulnerable businesses, although both banks have said they have increased lending in the UK.

Barclays lent around £17bn to UK households and businesses in the first half of the year, while HSBC has committed £15bn for mortgage loans.

Vince Cable, the Liberal Democrat Treasury spokesman, said: “The rate charged by lenders is doing terrible damage to the British economy and ultimately the banks themselves. It’s ultimately a very short-sighted and selfish approach.”

“If it wasn’t at the expense of the rest of the country one wouldn’t be complaining about it, but it is.”

Shares in the banks were up as a result of the news, with Barclays seeing a 6.7% rise, and HSBC congested behind with a 5% increase.

Barclays’ chief executive John Varley said: “The investments we have made, particularly in our international businesses, are driving very strong income performance and allowing us to absorb the consequences of the economic downturn.

“Our goal for 2009 is very clear: we seek to deliver another year of solid profitability. Our first half performance is a good start to this.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .