Profits at Barclays have fallen by almost a third for the first half of this year, largely due to costs of compensation for those affected by the payment protection insurance scandal.

Profits dropped by 33 per cent to £2.6bn but were still higher than City analysts had expected.

The reason for the drop was that the firm had made provisions totaling £1bn for customers affected by the PPI mis-selling scandal earlier this year.

Some £2.3bn of the £2.6bn total came from Barclays Capital but this was down from £3.4bn a year ago.

Barclays Wealth decreased by seven per cent to £88m, down from £95m in 2010. Income for the sector increased by 12 per cent to £848m, up from £757m last year and net operating income also increased by 14 per cent to £829m.

Chief executive Bob Diamond said: “I am pleased with the progress made across Barclays in the first half. We have performed well on our journey to a targeted 13 per cent return on equity by 2013.”

Despite this, the company is set to cut 3,000 jobs at the firm, following 1,400 cuts earlier this year. Some 500 of these were at the UK consumer unit and a further 700 within Barclays Capital. The company employs about 146,000 people globally.

The news follows the announcement yesterday that HSBC would be cutting 30,000 jobs despite profits of £7bn.