BARCLAYS, THE first of Britain’s biggest banks to report full-year earnings, cut bonuses at its investment banking unit by 32 per cent after profit fell.

Net income for 2011 fell 16 per cent to £3 billion (€3.6 billion) from a year earlier.

The bank raised its full-year dividend by 9 per cent and said its investment banking unit made an “encouraging start” to the year.

The shares climbed as much as 5.1 per cent.

The lender yesterday set a £65,000 limit on cash bonuses and cut remuneration for its top executives by almost half.

The bank may still miss the 13 per cent profitability target Barclays chief executive Robert Diamond set a year ago.

Return on equity fell to an “unacceptable” 6.6 per cent in 2011, he said yesterday.

Barclays was the last British consumer bank to have kept its profitability target as Europe’s debt crisis and tougher regulation eroded investment-banking earnings.

“Diamond will have to once again lay out a road map on how he can improve returns,” said Christopher Wheeler, a London-based analyst at Mediobanca SpA who has an “outperform” rating on the stock.

“Very encouragingly” the bank increased the dividend, he added.

Barclays gained 0.4 per cent at 234.05p in London trading, for a market value of about £28.6 billion. The bank increased its dividend to 6p a share.

The London-based lender yesterday also raised its cost-cutting target for next year to £2 billion to bolster profit.

Among the UK banks, Lloyds Banking Group said in November it may not meet some of its medium-term financial targets until beyond 2014.

HSBC has said it will meet only the “softer end” of its 12 per cent to 15 per cent return-on-equity target.

Mr Diamond said he was not cutting or abandoning his own probability target.

“The target remains 13 per cent,” he said yesterday.

“Because of some of the external headwinds, we can’t be as convinced that 2013 will be the year.” – (Bloomberg)