BANKING group Barclays yesterday reported a six per cent fall in profits, after figures were knocked by a steep rise in the amount it set aside to cover bad debts.

The group said pre-tax profits for the half year to June 30 fell to £1.75bn, against the same period the previous year.

Profits were affected by a rise in provisions for bad and doubtful debts, which increased to £713m, up from £498m last year. Of this, £104m related to loans made to Argentina.

Figures were also damaged by the stockmarket slides, which hit its life assurance business.

Chief executive Matthew Barrett said: "Barclays' underlying performance in the first half benefited from a strong inflow of new customers and increased business volumes.

"Although we made good profits, they were lower than the first half of 2001 because of our decision on provisioning for Argentina and the impact of the market decline on income in our life assurance business."

Operating profits for the half year fell four per cent to £1.99bn.

Barclays said that without the life assurance and Argentina impact, operating profits would have risen eight per cent.

Mr Barrett said that the market environment remained "challenging".