Barclays bank headquarters building in Canary Wharf in London.
Barclays bank headquarters building in Canary Wharf in London. - 
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BILL RADKE: As I mentioned, Britain's second biggest bank
is reporting about five-billion dollars in profits for the first half of this year. But as Christopher Werth reports, Barclays is still battling bad debt.

CHRISTOPHER WERTH: Profits at HSBC are half what they were this time last year. Barclays saw an 8 percent rise, but fell well short of what analysts had projected thanks to toxic assets that have almost doubled to over $7 and a half billion dollars in the first half. The bank could be facing up to $15 billion in bad loans.

Richard Snook is a senior economist at the Centre for Economic and Business Research. He says Barclays has been far more conservative than other big British banks about writing down those bad assets.

RICHARD SNOOK: So you know we're in a recession, lots of corporate insolvencies, lots of personal insolvencies. So actually it may be that we see further write-downs at Barclays.

But the bank's purchase of Lehman Brothers late last year has paid off. Much of those profits came from its investment banking arm, and an expansion of its customer base into the U.S. market, which now accounts for about 40 percent of its income.

In London, this is Christopher Werth for Marketplace.