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UK banking group Barclays has reported a drop in full-year profits to £7.08 billion following write-downs during its second half caused by turbulence in the credit markets.

Annual profit before tax in 2007 declined by one per cent as the US sub-prime crisis led to losses of £1.63 billion for the bank.

But Barclays said it was confident going forward, and had increased its final dividend by ten per cent to 22.5p.

John Varley, group chief executive, said: "Barclays delivered a resilient performance in 2007, with profits broadly in line with the record prior-year results.

"The strength of our diversified businesses gives us confidence for the period ahead."

Other banks reporting results for 2007 have recorded losses running into the billions with many warning write-downs will continue into a second year.

Swiss bank UBS said the sub-prime crisis has cost £9.24 billion in 2007 while Credit Suisse has admitted it will have to write down an additional £1.46 billion due to ongoing adverse conditions.

In Barclays' UK retail banking division, more customers opened savings accounts over the year, bringing the total up to 11.1 million. Meanwhile, the bank lost current account customers, as numbers declined from 11.5 million last year to 11.3 million.

Although profit before tax in the retail banking segment climbed nine per cent to £1.28 billion over the year, customers claiming back overdraft fees cost the bank £116 million causing a dip in income to £4.3 billion.

Shares in Barclays fell 1.74 per cent to $4.52 on morning trading on the London Stock Exchange.