Barclays became the second of the big banks to report on Tuesday, posting pre-tax profit of £2.64 billion in the first half, down 33 per cent from £3.94 billion in the same period last year.

The FTSE 100-listed firm said it had placed a £1 billion provision for payouts related to the payment protection insurance scandal, which was exceptional to the period and so distorts comparisons with the first half of 2010.

Despite this, adjusted return on average shareholders' equity was up at 9.1 per cent, compared to 6.9 per cent a year earlier.

Impairment charges have also fallen 41 per cent to £1.8 billion.

Bob Diamond, the bank's chief executive, said: 'I am pleased with the progress made across Barclays in the first half.

'We have performed well on our journey to a targeted 13 per cent return on equity by 2013 and have made some specific progress against our execution priorities of capital strength, returns on equity, income growth and citizenship.'

Barclays said its core tier one ratio, required under Basel II capital requirements to be at least 6 per cent, was up at 11 per cent during the period and improved slightly from 10.8 per cent last year.

The group's investment division, BarCap, saw pre-tax profit of £2.35 billion, down from £3.02 billion in the same period of 2010. Retail and business banking also saw a drop in profit from £1.2 billion to £446 million.

A second interim dividend of 1p per share, took the dividend to 2p per share for the half year.

Diamond concluded: 'Our capital, liquidity and funding position is rock solid. We look forward to the finalisation of new banking regulations over the coming months. In the meantime we are meeting our Project Merlin commitments and have extended £20 billion of new lending to businesses in the UK in the first half.

'We are on track to lend at least £40 billion for the year.'