Shares in Barclays Britain's biggest credit card lender, fell today after it warned of consumer bad debts rising beyond its previous guidance.
"Based on current trends, Barclays now expects impairment losses for 2005 to be somewhat higher than the last published risk tendency," Barclays said in a trading statement.
Despite the rise in bad debts, the bank had strong profit growth in the first quarter of the year, it added. Barclays posted 2004 pretax profit up 20 per cent to £4.6 billion ($8.4 billion) in February but the results were helped by lower-than-expected bad debt provisions.
The bank had forecast provisions of about £1.4 billion for this year up from £1.1 billion in 2004.
Barclays said the main increase in bad debts was in credit card lending at the Barclaycard consumer loans unit, where rising provisions and costs more than offset improved income performance in the first quarter.
There was a "significantly smaller impact in consumer loans and mortgages".
The bank's shares were down 3.4 per cent to 531p this morning, making the stock the worst performer in the benchmark FTSE 100 index.
Barclays is the first of Britain's big commercial banks to update the market on trading this year ahead of first-half results. Investors are concerned that slowing revenue growth and rising bad debts could dent profits after interest rates rose.