Banking giant Barclays saw Tuesday a 33 percent drop in profits to 2.6 billion pounds in the first half of the year as the payment protection insurance (PPI) scandal took its toll, the bank said. The group, one of Britain\'s top five banks, set aside 1 billion pounds in the six months to June 30 to cover compensation for customers who were mis-sold PPI. But stripping out the PPI provision, Barclays would have seen profits increase 24 percent to 3.7 billion pounds in the period - ahead of expectations. The figures released in a statement are the latest in a week of half-year banking results, which started yesterday with HSBC revealing a better-than-expected 3 percent increase in pre-tax profits to 11.5 billion US dollars (7 billion pounds). The group saw reported pre-tax profits at its retail and business banking division drop 63 percent to 446 million pounds, but this includes the PPI hit. Barclays Capital saw a decline in both adjusted and reported pre-tax profits, down 9 percent to 2.3 billion pound and 29 percent to 2.4 billion pounds respectively. The bank recorded a 41 percent drop in bad debt charges to 1.8 billion pounds as a result of closer management of its risks in troubled eurozone countries including Spain and Portugal. Barclays offered some reassurance for the UK Government, confirming it was meeting its project after lending 20 billion pounds to businesses in the first six months, in line with its 40 billion pounds target for the full year.