Imagine the board meeting to discuss the results for 2005. Two scenarios - first how bad debts are screwing up the personal side of the business, second how to make the huge profits politically acceptable. IMO the second is much more likely, with BARC being more prudent than many in the sector, hence the massive increase in "provisions" (i.e. possibility only of default, not actual bad debt) which may or may not be released back into profits in years to come. Looks a core long term holding to me, with steadily increasing dividends and takeover possibility in for nowt, but dyor.

Thanks for input Alan. Disagree about value of credit balances - see their margin on retail credit balances (mentioned in part 2 of the results) is the highest of any of their sectors at 1.98%, apart from Barclaycard lending ( and anyone who borrows on that is imo an idiot). And that without any risk. I was around when London & County Securities went bust early 1970s and have always been wary of lenders to secondary market since. Lots of money to be made if you get the timing right, but risk of getting it wrong too great for me.Outlook benign at present, but things change and if/when interest rates rise watch out.Provisions then will become reality and whilst the likes of BARC will cope, there will IMO be casualties in the sub prime sector.Looking at BARC again, one figure which made my eyes water is "liabilities on derivatives" at 138BN, up from 98Bn in 2004 - don't pretend to know what this is all about, but figure large enough to suggest that this is one area where if the merry go round stops some of the big boys might imo have a problem.

BARC up again. Will it get to 670p?

If you buy a shed load then yes! Thats supply and demand for you. mind you rise is on back of results and Barrons upgrade - they reconed +20% in a year

I will be happy when they get to Merrill Lynch's 819p but then I'll be looking for 1000p.!!

Citigroup target price 550 to 575p
Morgan Stanley 720 to 740p
Goldman Sachs 684 to 695p
Merrill Lynch 801 to 819p
Lehman Bros 686 to 714p

Feeling rather smug about post4 above, but wish I had sold more than the half of my holding which I did at prices above 7. The Derivatives exposure in Barc balance sheet continued to increase sharply during 2006 and first half 2007: it will be interesting to look at the end of year numbers in three months time.For the first time in a while, gut feel says they may now be looking good value for the brave, but always DYOR

You have every right to be smug!!
I am kicking myself for not seeing the problem coming, but consoling myself that people paid obscene amounts of money to analyze the market missed it too!
I still think the second charge market is going forward apace, though.
As sub-prime mortgages are more scarce, it will be peoples last chance to get out of trouble. The key difference is that sub prime mortgages are set up to perform, and depend on that, whereas most sub prime second charges are set up with repossession in mind.
Added to this, the FSA has declared war on the retail mortgage market, so my comments of last year stand more than ever. Fewer mortgages available to these people and more and more intermediaries are unwilling to advise on sub prime mortgaging, knowing that the FSA will be all over the file, trying to prove bad advice. Much safer, more lucrative and easier to sell the client a secured loan that is not regulated by the FSA, and wait for the good times to return to remortgage them.
Good advice??? Often not, but the market conditions and over zealous nature of the FSA toward intermediaries are forcing the path.
Am currently looking for who might benefit most from this situation and will let you know if I arrive at a conclusion.
Alan

Thanks Alan - look forward to fruits of your deliberations in due course. I have recently taken a modest position at 90p in Scottish debt recovery firm Invocas, which appears to have a different (and in my view more professional) business model than the ambulance chasers south of the border.