By Margot Patrick 

LONDON-- Barclays PLC Executive Chairman John McFarlane sketched out a cautious turnaround plan on Wednesday but made one thing clear: The British bank won't be going toe to toe with big Wall Street firms in markets around the world.

In announcing a sharp rise in second-quarter profit, the interim head of the bank scrapped a plan to raise the dividend and said he was "personally pleased" with the performance of the firm's investment bank. He reinforced previous comments from bank officials that the days of Barclays competing in most global markets are likely over.

The big U.S. banks "have scale that we no longer have to be global," said Mr. McFarlane. "I wouldn't say that we have an ambition to be global, we don't. That's the reality of the world now."

Instead, he said, Barclays would focus on improving performance in its three core markets of the U.K., U.S. and South Africa.

Mr. McFarlane said the bank would retain capital and hold its dividend steady at 6.5 pence a share this year, as well as shed unwanted assets more quickly, to help break a cycle of sluggish revenue growth and high costs since the financial crisis.

The move came as the lender reported a sharp rise in second-quarter net profit to GBP1.15 billion ($1.8 billion) from GBP161 million in the same period last year. The second-quarter net profit figure was helped by a one-time, GBP496 million gain on Barclays's acquisition of parts of Lehman Brothers in 2008, while the second quarter last year was held back by higher operating and restructuring costs.

Mr. McFarlane, who fired Antony Jenkins as chief executive earlier this month and is temporarily running the bank, said Barclays would eventually return to paying higher dividends by improving revenue growth, investing capital more effectively and cutting costs.

"A high and progressive dividend will in future need to make up a significant portion of our annual total shareholder return," Mr. McFarlane said. With the stock price still hovering at 2009 levels, "shareholders have been incredibly patient," he added.

In holding the dividend Barclays abandoned its earlier payout target of 40% to 50% of earnings. The bank also said there aren't any plans to raise capital from shareholders.

On Barclays's investment bank, a key area of uncertainty for shareholders, Mr. McFarlane said the strategy would remain largely the same, with operations focused around the U.S. and U.K. and to a lesser extent Asia. He said a new plan had been agreed to refine the investment bank's strategy, building on "what we are good at and where we are good at it."

Second-quarter revenue at Barclays's investment bank was flat at GBP2.15 billion. Lower restructuring costs helped drive a 35% rise in the unit's pretax profit in the period, but returns on equity are still lagging those in Barclays's other businesses.

In retail and corporate banking, Barclays posted a 9% fall in adjusted profit before tax, to GBP709 million from GBP780 million, as operating costs rose. The number strips out a new, GBP850 million provision in the second quarter to compensate U.K. customers for missold products including payment protection insurance on loans.

The strategic plans announced Wednesday were made three years into a prolonged period of transition at Barclays after an era of high returns from its once-huge investment bank was ended by rising capital requirements and the exit of former CEO Bob Diamond in 2012.

Mr. Jenkins proved to be a stopgap CEO, helping the bank improve its culture and standards but never fully convincing shareholders or analysts that Barclays had figured out how to adapt to a changed banking industry. He was fired on July 8, with Mr. McFarlane saying Barclays "urgently required" a different person running the bank.

Analysts at Citigroup said the flat dividend guidance is "slightly disappointing, but understandable in the context of a faster noncore run down strategy." Barclays shares rose 1.8%, underlining a 13% rise since Mr. McFarlane stepped in as the bank's boss.

Mr. McFarlane's appointment as chairman this spring was greeted enthusiastically by shareholders, who had high expectations after his previous successes in turning around other financial companies including insurer Aviva PLC.

Nicknamed "Mack the Knife," Mr. McFarlane wasted little time in overseeing Mr. Jenkins's departure. He will now be judged on his ability to improve returns in Barclays's core businesses, which consist of U.K. retail and commercial banking, U.S. and European investment banking, credit cards and Africa.

Max Colchester contributed to this article.

Write to Margot Patrick at margot.patrick@wsj.com

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