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Barclays has reported 2008 profits of £6.1 billion, 14 per cent down from last year but ahead of expectations.

The bank said positive gains from the sale of units, the acquisition of part of Lehman Brothers and profits in commercial banking helped offset writedowns of £8.1 billion.

On average, analysts had predicted profits of £5.8 billion for the year.

Barclays, which declined government cash to rebuild its depleted reserves in favour of overseas funding, said it would not be paying a final dividend to shareholders this year.

As the row over bankers' pay rages, Barclays also said it would not be rewarding executives with bonuses this year.

Bonuses will still be paid out to staff working below board level, but the cash available for these payments has fallen by 48 per cent compared to last year, the bank said.

"We are conducting reviews at the moment which are designed to ensure that, through time, our compensation policies evolve appropriately," chief executive John Varley said.

In its outlook, the bank said it has had a "good start to the year," but was cautious about the rest of 2009.

Mr Varley said: "2009 needs to be a year of returns not growth. We are very emphatic about that. It needs to be a year of consolidation where return on capital and the driving for returns represent the magnetic north for the business."

Barclays said it would resume dividend payments in the second half of the year.