Barclays gets surprise core capital boost as profit climbs

By Lawrence White and Andrew MacAskill

LONDON (Reuters) - Barclays reported a surprise increase in its core capital ratio on Thursday, as the bank took advantage of its rising profits to put money aside for expected demands on its cash from legal issues and worsening global market conditions.

The bank's capital ratio, a key measure of financial strength, rose to 12.4 percent against analysts' expectations it would only reach 11.8 percent.

Barclays said the capital boost came from increased profits as the group nears the end of a major restructuring.

"...we are well positioned to absorb headwinds over the next few years. Certain legacy conduct issues remain and we intend to make further progress on them," Chief Executive Jes Staley said in the bank's statement.

Barclays faces a suit by the U.S. Department of Justice on civil charges of fraud in the sale of mortgage-backed securities during the run-up to the 2008-09 financial crisis.

Barclays is so far alone among major banks in choosing to contest its case where rivals have settled.

Barclays reported an adjusted full-year pre-tax profit of 3.2 billion pounds ($3.98 billion), compared with 1.14 billion a year earlier. That was below the average forecast of 3.97 billion from analysts' estimates compiled by the bank.

The bank said it would close its non-core division that holds its assets earmarked for sale in June, six months earlier than expected.

The bank also said it had reached an agreement with its African division on the terms of their separation that will see it pay Barclays Africa 12.8 billion rand ($988 million) to fund investments required to separate the two.

Staley said the result showed progress on a plan announced last March under which Barclays will shed unwanted assets including most of its stake Barclays Africa in favour of a 'transatlantic' strategy focused on the United States and Britain.

"We are now just months away from completing the restructuring of Barclays, and I am more optimistic than ever for our prospects in 2017, and beyond," Staley said in the bank's statement.

($1 = 0.8043 pounds)

(Reporting By Lawrence White and Andrew MacAskill; Editing by Rachel Armstrong and Jane Merriman)