Barclays delivered bumper half-year results yesterday despite bad debts, notably from Barlaycard, passing the £1 billion mark and a sluggish performance in the mortgage market.

John Varley, Barclays' chief executive, pointed out that half the bank's £3.67 billion profit came from outside the UK - up from 40 per cent last year and 20 per cent in 2000.

This represented a 37 per cent improvement on last year's half-time profit, or 23 per cent without the contribution from last year's acquisition of a majority stake in the South African bank ABSA. It generated a 25.8 per cent return on equity.

The most striking contribution came from the investment banking wing, Barclays Capit al, accounting for £1.25 billion of the total profit, 66 per cent more than last year.

The fund manager, Barclays Global Investors, produced another £364 million, a 51 per cent improvement.

UK banking was 11 per cent ahead with £1.265 billion, £612 million of it coming from the retail side.

Barclaycard suffered a 14 per cent setback in profit terms, after bad debts of £696 million - up from £508 million in the same months last year - trimmed its profit to £297 million.

Barclays said it expects bad debts continue to be affected by increases in debt and personal bankruptcies in the second half-year.

"The environmental conditions that are putting pressure on some UK households remain, but I can see in our performance in the first half the business responding to action we took in 2005," Mr John Varley said.

Barclaycard is now rejecting half all applications for new cards, he added.

He refused to join other bankers in calling for a change in the Insolvency Act, which has made bankruptcy easier.

"We have to be big boys," Mr Varley said. "We play by the rules of the country. We choose to do business here."

Barclays Capital said its income grew across all asset classes and geographies. With little proprietary trading, it escaped the stock market losses there that hit many of its rivals.

Barclays is attempting to revive its UK retail bank and said in June it would close up to 200 branches as it consolidates its Woolwich and Barclays branches.

Mr Varley declined to say what share of the market for net mortgage lending - after repayments - Woolwich had secured in the half-year. But its total mortgage balance slipped by 0.5 per cent to £59.3 billion.

Varley said net mortgage lending had been positive in May, June and July and that it won five per cent of the market from gross mortgage advances over the six months.

Barclays said it invested an extra £114 million in UK banking in the first half.