20 February 2008
UK bank Barclays reported on its year-end results yesterday, announcing profits of £7.12 billion.
However, the bank also revealed the extent to which it has been stung by the ongoing credit crunch - with £2.7 billion of write-offs of bad debts also announced.
This pattern of losses through debts, ultimately caused by customers borrowing more than they can pay back, looks set to be continued throughout the banking sector through profit declarations in days to come, according to analysts at Dresdner Kleinwort.
Research from uSwitch also suggests that, for every £1 of profit to be declared by banks, 44p was written off.
Commenting, personal finance expert at uSwitch Mike Naylor said: "With the global credit crunch well and truly gripping the nation, an increased level of write-offs by the Barclays Group in 2007 is no great surprise.
"Going forward, 2008 is going to be a challenging year for every UK bank with the OFT court case axe hanging over their profits - the outcome is very likely to present tough financial challenges for the banks which could end up hitting consumers where it hurts, in the pocket."
Accordingly, Mr Naylor called on banks to "put proper measures in place" in order to prevent customers from taking out too much on credit.
Full income checks - as well as data sharing on potential credit risks between banks - both came recommended.
© 2008 Adfero Ltd
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