The re-branding and restructuring of Barclay’s wealth management offering last year has had an immediate effect on 2006 financials which were released today.

Barclays Wealth, incorporating Barclays Private Bank and private client broker Gerrard, increased pre-tax profits during 2006 from the £166 million recorded for 2005 to £213 million for 2006, a 28 per cent increase.

"This reflected broadly based income growth and favourable market conditions, partially offset by a significant increase in investment in people and infrastructure to build a platform for future growth," the firm said in a statement.

Income increased by £114 million to £1,036 million, a 12 per cent increase on the £922 million recorded in 2005.

In the year to 31 December 2006, Barclays Wealth total assets under management increased 20 per cent to £93 billion (31 December 2005 £78.3 billion).

This reflects strong growth in lending to high net worth, affluent and intermediary clients, according to the bank.

Barclays Wealth staff numbers rose 600 to 7,800 to support the continued expansion of the business, including increased hiring of client facing staff.

Operating expenses increased by 9 per cent to £821 million, with higher volume related and investment costs more than offsetting efficiency gains.

The cost income ratio improved by three percentage points to 79 per cent.

Thomas Kalaris, chief executive of Barclays Wealth said: “This excellent set of results cements Barclays Wealth’s position as the leading wealth management firm in the UK. We have increased investment in the business, improved our cost to income ratio and both total client assets and income rose. Profits before tax for Barclays Wealth increased by 28 per cent and are nearly double those returned in 2004 – up from £110 million in 2004 to £213 million in 2006.”

Barclays Wealth say that the demographic and economic factors make the market for wealth management particularly attractive. This is a fragmented industry where even the global market leaders do not have a commanding market share, it says.

The bank says that it is building the wealth management business in a steady, sustainable way.

"We continue to develop the global franchise from a strong UK base including developing our Asian business in close co-operation with our Barclays Capital partners, investing in the Middle East as a key area of growth for the business, as well as developing our successful onshore Private Banking offering in Spain," said Barclays Wealth in a statement.

"Our scale means we’re very much in the driving seat in terms of sourcing the best solutions and products from across the market for our customers. A particular highlight was the rapid growth in our Barclays Multi-Manager portfolio service which in 2006 grew by 68 per cent to £10.1 billion.

"We have unique access to the Barclays Global Investors product suite, and our relationship with Barclays Capital which enables us to provide private clients with innovative, institutional-quality ‘structured’ products and other investment vehicles.

Barclays Wealth launched over 300 such products in 2006.

Last year also saw the launch of Investment Notes, tradable structured products listed on the London Stock Exchange.

These are designed for retail investors that want some exposure to more volatile markets, while retaining an element of capital protection at maturity. Eight Investment Notes have been launched to date, with regular launches planned.