THREE cheers for Barclays.

The boys in blue produced outstanding results last week, giving a huge lift to the soaring stock market.

The group announced record profits, lower impairments and a big increase to the dividend.

That they did so, without taxpayer support, should be applauded in all quarters.

Barclays failed to fall into the trap of giving equity away to the Treasury, at what would have been their 17-year share price low point. Instead, they stood on their own two feet, found capital from other sources and have since gone from strength to strength, free to some extent from external interference.

Barclays’ core capital tier one ratio increased to more than ten per cent, blowing away worries from some that they would need to raise additional capital.

They also destroyed the myth that investment banking represented a risk to core retail and commercial banking. If you remember, in the UK the “failed” banks were mortgage and property lending banks, a fact that casino politicians continue to ignore with their criticism of investment banking.

The really troubling aspect of these casino politicians is that they do not know what an investment bank does, despite their eagerness to call for banks to be broken up.

Barclays proved that diversification within a business is a safeguard from differing economic cycles.

Another politician and media myth is that the £200bn of quantitative easing factor was a factor in bank profits. Given that 99 per cent of the Bank of England’s magic money has been used to buy Government debt from either the Government directly or from pension funds is an inconvenient fact to some blinkered views.

A further myth is that banks profit from low interest rates. The truth is that to attract deposits as a funding source, rates offered can be well above ultra-low base rates. Banks to do not source much of their funding at base rate, as some believe, but more so through capital markets, where the cost of funding is nearer to four per cent.

Thursday sees Royal Bank of Scotland announce results, followed by Lloyds Banking Group on Friday.

RBS – 70 per cent owned by the Treasury – has had every possible obstacle to getting on with the job put in its way. Lloyds Banking Group, where the Treasury has a minority 41 per cent stake, meaning that it is 59 per cent majority owned by private investors, has been busy sorting out HBOS’ feckless borrower problems.

While neither group is expected to announce profits for last year, the focus will be on the bad debt impairment figures. Should these have peaked, the under-valuations could be sharply arrested.

With most corporates having taken advantage of lower interest rates to refinance last year, the huge sums of money still with bond funds will need to chase the remaining refinancing requirements this year, and they are very happy to take up the bank bonds rolling over in 2010.

Bond fund managers have been happy to contrast the performance of bonds versus shares over the past ten years. The comparison start point of January 2000 was conveniently the highest level for the FTSE 100. If the goalposts are moved to March 2003, nearly a seven-year measure, the performance of shares has smashed that of bonds, even after the best year ever for bonds in 2009.

■ Anthony Platts is a divisional director in the Teesside office of Brewin Dolphin, and can be contacted on 0845-213-1340. All prices quoted in the article are from public sources. The views expressed are not necessarily held throughout the Brewin Dolphin Group. You should bear in mind that no investment is suitable for all circumstances and it is important to seek expert advice if in any doubt. Brewin Dolphin Limited is a member of the London Stock Exchange, authorised and regulated by the Financial Services Authority.