Barclays is on track or ahead of schedule on all six elements of its turnaround plan, said its chief executive, Antony Jenkins, on Wednesday. Since this plan is only two months old, and in any case represents plan B, this is not quite the triumph it might sound.
The same applies to the 4% jump in the share price. The rise merely returned the shares to where they were a month ago before Eric Schneiderman, New York's attorney general, alleged fraud and deceit within Barclays' "dark" trading pool, charges the bank denies. In terms of book value, Barclays remains one of the most lowly rated major banks.
But, yes, a little credit is due. There is a sense that New Barclays is finally taking shape. The retail bank, the corporate bank and Barclaycard all recorded stronger profits in first half of this year. The bits of Barclays investors tend to like are performing better.
The big mystery, and the main reason for the shares' lowly rating, is the investment bank. Profits there plunged by 46% in the six months, contributing to an overall fall of 7% in group profits to £3.35bn.
That outcome in investment banking was better than many had feared given the whirl of internal restructuring and weak trading volumes in many corners of the market. But whether a healthy investment banking core will emerge in, say, a year's time once the cost-cutting and retreats from capital-intensive areas have been completed, remains an open question. The division's return on equity was just 5.7% in the first half – miles away from earning the right to exist, even in a slimmed-down form.
We have yet to see whether Jenkins can stick to his promise to tie bonuses to performance. Last year he capitulated to avoid the risk of what he called a "death spiral" of defections. On Wednesday Barclays refused for the first time to give a ratio for investment bankers' compensation on the grounds that the number would be misleading at the half-year because bonuses are determined at year-end.
Technically speaking, the plea is semi-understandable: the new system of deferring bonuses complicates the arithmetic. But silence offers shareholders no clues on whether Jenkins has discovered his backbone on bonuses. If he has not, improvements elsewhere will count for little.
In the meantime, one other figure leaped from the results statement – the fresh provision of £900m for payment protection insurance, taking Barclays' tally to almost £4.8bn. It was accompanied by the startling revelation that 44% of claims came from people who never had a PPI policy with Barclays in the first place. The banks are reaping what they sowed, so sympathy is limited. But the claims-management firms which orchestrate bogus claims have become a bunch of chancers. They deserve a hard regulatory slap.
guardian.co.uk © Guardian News and Media Limited 2010