By Steve Slater and Clara Ferreira-Marques
LONDON (Reuters) - Barclays Plc <BARC.L> said strong investment banking helped limit a fall in profit in the third quarter and it expects bad debts to peak earlier than it had previously expected.
Britain's second-biggest bank said on Tuesday it would restart dividends next month with a payout of 1p per share, as it reported a third-quarter profit of 1.56 billion pounds ($2.6 billion), down from 2.8 billion a year ago.
For the nine months to the end of September it reported a pretax profit of 4.5 billion pounds, down from 5.6 billion a year ago. Profit excluding gains on acquisitions, debt buybacks and other one-off items more than doubled to 4.4 billion, the bank said.
By 0807 GMT (3:07 a.m. EST) Barclays shares were down 2.9 percent at 333 pence.
Barclays said impairment charges and other provisions hit 6.2 billion pounds in the nine months, up from 3.8 billion a year ago, as a fragile UK economy and rising unemployment led to more borrowers defaulting on loans.
Impairments reached 1.4 billion pounds in the third quarter, down from 1.8 billion in the previous three months.
Barclays said it expected impairments for the full year to be around the bottom end of the previously referenced 2009 consensus range of between 9 billion pounds and 9.6 billion.
October trading was "generally consistent" with the overall trend in the first nine months of the year, it said.
Profit at the investment banking arm Barclays Capital reached 1.4 billion pounds in the nine months, or 2.7 billion excluding a charge on its own debt.
BarCap is reaping the benefit from last year's purchase of the U.S. operations of bankrupt Lehman Brothers and the build-up of its equities and M&A advisory business in Europe and Asia.
It joins a batch of rivals reporting strong third-quarter results as capital markets and trading activity have remained lively, including U.S. rivals Goldman Sachs <GS.N> and JPMorgan <JPM.N> along with Europe's Credit Suisse <CSGN.VX> and BNP Paribas <BNPP.PA>.
(Editing by David Holmes)