Net profit rose to 3.56 billion pounds ($5.7 billion) in 2010 from 2.63 billion in 2009, Barclays PLC said.
Income before impairments rose 8 percent to 31.44 billion pounds. Charges for bad loans and other impairments fell by 30 percent to 5.67 billion pounds though the company reported a significant increase in write-downs for its operations in Spain.
Barclays Capital, the company's investment bank, reported a 94 percent increase in pretax profit to 4.78 billion pounds.
Investors liked the figures, bidding the shares up 2.7 percent to 319 pence in midmorning trading on the London Stock Exchange.
"The general market view of the shares as a buy should be strengthened by today's numbers," said Richard Hunter, head of U.K. equities at Hargreaves Lansdown Stockbrokers.
Phil Dobbin, analyst at Shore Capital, said the results were slightly ahead of expectations, "resilient in a difficult environment."
The company did not disclose any individual bonuses - that will come in the annual report in April - but said the bonus pool at group level was 7 percent lower than in 2009 and down 12 percent within Barclays Capital.
Barclays was among the so-called Big Four U.K. banks who agreed with the government to pay a lower total amount of bonuses for 2010 and to disclose salary details of both executive board members and the top five highest paid executives not on the board.
News reports, not confirmed by Barclays, say that Chief Executive Bob Diamond is in line for a bonus of 9 million pounds ($14.4 million).
Diamond said the company will be striving to raise its capital ratios to comply with the so-called Basel rules, a set of international standards for banks' capital buffers.
"The combination of where we finished 2010 and the continued demonstration of our ability to generate substantial equity organically should go some way towards this," Diamond said.
He set a target of a 15 percent return on tangible equity. In 2010, return on tangible shareholder equity was 8.7 percent, down from 9 percent the previous year.
In a research note published last week, Arturo de Frias at Evolution Securities noted that Credit Suisse had recently cut its target for return on equity and said he doubted that Barclays could achieve such a sharp increase in returns.
"Barclays business mix is structurally less profitable than Credit Suisse's and we think it is very unlikely to generate more than 10-11 percent return on equity. Only a radical shift in its business mix can change that," de Frias said.
Like Britain's other major banks, Barclays may face a government-required overhaul to its business. Business Secretary Vince Cable has been pressing for a separation of retail banking and riskier investment banking, but any such moves await the publication of the report of the Independent Commission on Banking in September.
Bruce Packard, analyst at Seymour Pierce, said he believes the commission will recommend structural changes. "Ultimately this should prove more beneficial to shareholders than the current industry structure in which some of the employees seem to be far better rewarded than owners," said Packard.