Barings profits jump 54%

SOME OF the gloom over merchant banking profits lifted yesterday when Barings announced half- year pre-tax profits up 54 per cent to pounds 54.8m, in stark contrast to last week's profits warnings from its rivals SG Warburg and Hambros.

Banking analysts attributed much of this to the difference between the mix of business at Barings and Warburg, which has suffered from poor bond markets. Barings has no UK securities business, far less reliance on the bond markets and a far greater percentage of earnings coming from the resurgent Far East.

Barings increased investment banking profits by 60 per cent to pounds 43.4m for the six months to 30 June, and said current trading was satisfactory. SG Warburg warned last week that it might make no more than pounds 15m from investment banking in the half-year to September.

Andrew Tuckey, deputy chairman of the privately owned Baring group, said: 'We did have an outstanding half-year in corporate finance. We floated 3i, acted for the Allied-Lyons acquisition of Domecq, the sale of William Low to Tesco and the Lloyds/ Cheltenham & Gloucester deal.'

'We also benefited from our very strong franchise in emerging markets, in South-east Asia, the Far East, South America, India and Eastern Europe. We opened three new offices in Pakistan, India and South Africa, and we are taking more people on.'

Barings' expansion into international issue business had gone well, Mr Tuckey said. The increase in administrative expenses from pounds 186.8m last time to pounds 247m reflected a rise in the group headcount from 3,400 a year ago to just under 4,000 now, as well as staff bonuses, he said.

The derivatives joint venture with Abbey National is roaring ahead of expectations just a year after launch, Mr Tuckey said, and has become 'a major force in the swaps business'.

The contribution from Baring's stake in the US institutional securities house Dillon Read was 'slightly down', not bad in the present carnage on Wall Street.