Barclays Bank has announced profits have fallen 33 per cent over the first half of the year in the wake of the credit crunch.

While the bank – the third biggest in the UK in terms of market capitalisation – made £4.1 billion in the first half of 2007, this has now fallen to £2.7 billion over the first six months of this year.

The fall was described as “acutely disappointing” by group chief executive John Varley.

“The conditions in the market that we have seen over the course of the last twelve months are as difficult as we have experienced in many years,” explained Mr Varley.

“Our shareholders have had to endure a lot. We are, and we will be, working as hard as we can to create the conditions that enable a higher price to be placed on our shares over time,” he added.

Basic earnings per share fell from 41.1 pence in the first half of last year to 27 pence this year.

The bank confirmed it took charges of £2.45bn for bad debt over the period; including a hit of £1.1bn from exposure to US sub-prime mortgage market, as well as other credit market problems.

Barclays has been forced to seek additional capital in recent months, appealing for investment from the Far East.

Some £4.5 billion has been raised, principally from investors in Qatar, China and Singapore.

Earlier this week, Barclays also agreed to the sale of its life assurance arm – Barclays Life (which has been closed to new business since 2001) – to Swiss Re for £753m, as part of its capital raising efforts.

Despite this the bank’s equity tier one ratio has fallen from 5.1 to five over the last year. This, however, is still ahead of industry regulation.

“It would be wrong in this review to suggest that the market conditions over the foreseeable future will be anything other than tough, not least because we are now seeing the impact of slowing economies around the world and that means that we must remain very vigilant to managing risk,” concluded Mr Varley.