BARCLAYS yesterday unveiled a 15 per cent increase in annual profits to £5.28bn.

The improvement was in line with expectations, but included a 19 per cent drop in profitability at Barclaycard after a greater hit on bad debt levels.

High street banking profits were up eight per cent to £2.45bn, but the main driver of growth came from investment banking with a 25 per cent rise to £1.27bn.

Global bank HSBC is expected to lead the way for banking profits when it posts a figure of about £11.5bn next month.

The second biggest earner is forecast to be Royal Bank of Scotland, with a figure of about £8.2bn.

Much of the growth for the banking sector has come from investments outside the UK, with domestic trading conditions seen as increasingly competitive.

Barclays said yesterday that 40 per cent of its profits came from outside the UK - up from 20 per cent five years ago and leaving it on course for 50 per cent in the next three years.

At the core UK retail business, Barclays achieved "solid" income growth of four per cent but benefited most from efficiency improvements as operating expenses fell three per cent.