John Varley, chief executive of Barclays, today posted what he called an "acutely disappointing" 33 per cent slide in first-half profits to £2.8 billion and apologised for the collapse in the bank's share price.

"Our shareholders have had to endure a lot," Mr Varley said, and gave warning that it would take a long time for the business volumes enjoyed before the credit crunch to be achieved again.

While the overall figures came in in line with City expectations, Barclays revealed that it had suffered losses as a result of unspecified hedge fund failures and because of souring loans to Spanish property developers and construction firms.

The bank also reported "some signs of strain" in UK company loans with more corporate borrowers being handled by its turnaround and recovery teams.

Total bad debts for the six months to June came in at £2.4 billion, a 155 per cent increase on the same period in 2007, as sub-prime mortgages and other credit-related investments continued to decline in value.

The investment bank, Barclays Capital, posted net credit losses of £2 billion, sending its profits diving from £1.7 billion last time to £524 million. The damage would have been £852 million worse, but for an accounting quirk that allowed BarCap to book a profit on the reduced price of its own notes.

Barclays Global Investors, the fund management arm, was also hit by the decline in world stock markets, recording a 32 per cent fall in profit to £265 million.

However, other parts of the bank proved more resilient, with Barclaycard, the credit card division, putting in the best performance with a 30 per cent increase in profit to £388 million.

As previously promised, Barclays held the interim dividend at 11.5p. Last month the bank raised £4.5 billion in a placing and open offer to shore up its weakened balance sheet.

The problems at BarCap continued at the same pace during the first half: £1 billion of net credit losses in the first quarter were followed by a further £1 billion hit in the second quarter. However, credit exposures were significantly reduced, Barclays said.

In the UK high street bank, Barclays took advantage of the home loans famine to build market share, boasting 26 per cent of the mortgage market in the first half, up from 6 per cent last year. Profits in UK retail banking grew 7 per cent to £690 million.

Barclays shares were up 14p to 383p in morning trading.

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