Barclays profit soars after slashing eurozone exposure

British bank Barclays said Monday that pre-tax profits rocketed to nearly £2.5 billion in the third quarter as the lender slashed its exposure to eurozone sovereign debt and cut costs. Pre-tax profits surged to £2.42 billion (2.76 billion euros, $3.87 billion) in the three months to the end of September, compared with £327 million in the third quarter of last year, the lender said in a results statement. Sovereign debt exposure to Greece, Ireland, Italy, Portugal and Spain, was slashed almost a third to £8.0 billion, it added. Just over half this exposure is to Italy, at £4.1 billion, and £2.7 billion is with Spain. "Eurozone country exposures continue to be managed closely and valued appropriately," Barclays said. The results were announced just days after a breakthrough deal to try and resolve the festering eurozone debt crisis. EU leaders last week had agreed to restructure Greek debt, bolster banks which would take losses as a result, help other countries struggling with debt, and more than treble the region's bailout fund to one trillion euros. Chief executive Bob Diamond, addressing reporters after publication of the earnings, said the eurozone debt rescue deal was "calming and substantive" but warned that there was more work to be done. Barclays added Monday that it was on course to beat its previously-announced target of £1.0 billion of annual cost savings by 2013. The group, which has cut 3,500 staff so far this year, expects to save £500 million in 2011. Retail bank operations in Britain, Europe and Africa, as well as the Barclaycard credit card unit, all posted rising third-quarter revenues and profits. That offset sharp declines at investment division Barclays Capital. Group pre-tax profits meanwhile jumped 19 percent to £5.1 billion in the first nine months of 2011, compared with the equivalent period a year earlier. "I am pleased with the performance we have delivered for the first nine months of the year ... despite significant economic and market headwinds," Diamond added in the earnings release. "These results demonstrate the continued progress towards our 2013 goals through building momentum across retail and corporate banking businesses and strong relative performance by Barclays Capital in difficult market conditions. "Our focus on cost reduction continues to deliver results and we are confident that we will exceed the £1 billion savings target we set earlier this year." Net profit rose seven percent to £2.65 billion in the first nine months. The group did not provide a net figure for the third quarter. Barclays initially surged to the top of London's FTSE 100 shares index in reaction to the results. However, the stock finished 2.93 percent down at 195.3 pence on the FTSE, which closed 2.77 percent lower at 5,544.22 points. Bank shares fell sharply across Europe on Monday, with many losing more than five percent, as investors expressed a lack of confidence for an EU deal aimed at solving the eurozone debt crisis. Barclays is the first of Britain's big banks to report quarterly earnings, with HSBC, Standard Chartered, Lloyds and Royal Bank of Scotland (RBS) and set to unveil results over the next fortnight. "Financials have also caught a cold despite better than expected Q3 numbers from Barclays bank, with RBS and Lloyds sliding and Barclays slipping into negative territory after initially opening higher," said CMC Markets analyst Michael Hewson. "These numbers (from Barclays) were helped by increased focus on driving down costs, but investment banking revenues have declined."