Barclays Q2 2025 Earnings Report

Barclays EPS Results

• Actual EPS: $0.62
• Consensus EPS: $0.50
• Beat/Miss: Beat by +$0.12
• One Year Ago EPS: N/A

Barclays Revenue Results

• Actual Revenue: $9.58 billion
• Expected Revenue: $7.06 billion
• Beat/Miss: Beat by +$2.52 billion
• YoY Revenue Growth: N/A

Barclays Announcement Details

• Quarter: Q2 2025
• Date: 7/29/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, July 29, 2025
• Conference Call Time: 4:30AM ET

Barclays (NYSE:BCS) provides various financial services in the United Kingdom, Europe, the Americas, Africa, the Middle East, and Asia. The company operates through Barclays UK and Barclays International division segments. It offers financial services, such as retail banking, credit cards, wholesale banking, investment banking, wealth management, and investment management services. In addition, the company engages in securities dealing activities. The company was formerly known as Barclays Bank Limited and changed its name to Barclays PLC in January 1985. Barclays PLC was founded in 1690 and is headquartered in London, the United Kingdom.

Barclays Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Strong Q2 performance: Income rose 14% year-on-year to £7.2 billion, profit before tax increased 28% to £2.5 billion, earnings per share jumped 41% to 11.7p, and cost-income ratio improved to 59%, driving a RoTE of 12.3% and a CET1 ratio of 14%.
• Positive Sentiment: Shareholder distributions up 21%: Barclays announced a £1 billion buyback (up from £750 million) and a 3p dividend per share, bringing total H1 distributions to £1.4 billion with plans for progressive increases.
• Positive Sentiment: On track with three-year plan, delivering £200 million in Q2 gross efficiency savings and eighth consecutive quarter of tangible book value growth, aiming for ~11% RoTE in 2025 and >12% in 2026 across all divisions.
• Positive Sentiment: Barclays UK deployment accelerating, with £17 billion of planned £30 billion RWAs placed to date, supported by four quarters of mortgage growth, strong credit card acquisition and corporate lending momentum, underpinning 2026 targets.
• Negative Sentiment: U.S. Consumer Bank to absorb a one-off ~£100 million GM portfolio day-one impairment in Q3 and ~£50 million quarterly migration charges thereafter, partially offsetting improved net interest margin and rising retail deposit levels.

Presentation

[Operator]

Welcome to Barclays Half Year twenty twenty five Results Analyst and Investor Conference Call. I will now hand over to C. S.

[Operator]

Venkatakrishnan, Group Chief Executive, before I hand over to Anna Cross, Group Finance Director.

[C.S. Venkatakrishnan, Group Chief Executive & Director at Barclays]

Good morning, everyone. Thank you for joining Barclays' second quarter twenty twenty five results call. I'm very pleased to announce very strong results for this quarter. Income grew by 14% year on year to GBP 7,200,000,000.0 profit before taxes grew by 28% to GBP 2,500,000,000.0 and earnings per share grew by 41% to 11.7p. Return on tangible equity was 13.2% in the first half of the year and 12.3% in the quarter.

[C.S. Venkatakrishnan, Group Chief Executive & Director at Barclays]

This compares to 11.1% in the 2024 and nine point nine percent in the second quarter of last year. Cost income ratio at 59% in the second quarter is a four percentage point improvement versus last year. This performance drove an eighth consecutive quarter of growth in tangible book value per share now to 384p, and it has driven strong capital generation with a CET1 ratio of 14%. As a result, we are announcing a £1,000,000,000 buyback today, up from £750,000,000 in the 2024, and we expect to initiate this in the coming days. And we are also announcing a dividend per share of 3p.

[C.S. Venkatakrishnan, Group Chief Executive & Director at Barclays]

This total of £1,400,000,000 of shareholder distributions for the 2025 is up 21% year on year, and we expect our distributions to continue to build progressively, supported by increasing capital generation. These strong results mark the midpoint of our three year plan to deliver a better run, more highly performing and higher returning Barclays. I'm very pleased with the group's operational and financial progress so far. We remain committed to and confident in achieving the full objectives of this plan, and this includes a return on tangible equity of circa 11% in 2025 and more than 12% in 2026. By design, our plan is delivering operational improvements across each of our divisions to drive structurally higher and more consistent group returns in 2026 and beyond.

[C.S. Venkatakrishnan, Group Chief Executive & Director at Barclays]

In the second quarter, we achieved a further GBP 200,000,000 of gross efficiency savings or $350,000,000 for the 2025. This is a good progress against our target of circa $500,000,000 for the year. All of our divisions generated double digit RoTE in the second quarter. This includes a 2.6 percentage point year on year improvement in the investment bank's RoTE to 12.2% and a one percent improvement in the U. S.

[C.S. Venkatakrishnan, Group Chief Executive & Director at Barclays]

Consumer Bank RoTE to 10.2%. Before handing over to Anna to take you through the results in more detail, let me share a few reflections on our progress at the midpoint of our plan. I'm very pleased with what we have achieved so far. Our three year plan set out in February 2024 outlined a roadmap to produce higher and more balanced returns. We have seen the value of clearly articulating our targets and capital framework, the value of providing transparency for shareholders and the value of driving accountability and disciplined execution internally.

[C.S. Venkatakrishnan, Group Chief Executive & Director at Barclays]

I would stress that our 2026 targets were never intended to be a resting place and nor do they represent the extent of our ambition for RoTE capital distributions nor the proportion of group capital allocated to the investment bank. We are executing against our plan as we said we would, resulting in higher shareholder returns. And the momentum which we are seeing across the group positions us well to deliver our RoTE guidance and targets by continuing to drive income growth, by increasing operating leverage and with our business mix changes. Since 2023, we have deployed £17,000,000,000 of business growth risk weighted assets into our UK BIS focused businesses, Barclays UK, the UK Corporate Bank and Private Bank and Wealth Management. This includes £10,000,000,000 from organic growth.

[C.S. Venkatakrishnan, Group Chief Executive & Director at Barclays]

This organic progress and the acquisition of Tesco Bank mean that we have now deployed more than half of the planned £30,000,000,000 by 2026. Within the Investment Bank, we have intentionally kept RWA stable for three and a half years. This is driving efficiency and productivity. And to ensure that the division is a consistent source of capital generation for the group, I am very pleased with the performance halfway through the plan, with annualized income growth of 9% since 2023, in line with the division's high single digit growth target. I think about the investment bank's performance through two lenses, structural and cyclical.

[C.S. Venkatakrishnan, Group Chief Executive & Director at Barclays]

Structural improvements in the business are driving broader and deeper client relationships, and they're supporting income in a range of environments. A good example of this progress is in our markets franchise, where we now rank top five with 60 of the top 100 clients in the business. This is well on our way to our target of 70 by 2026, up from 49 in 2023. By strengthening our institutional client franchise, we have increased market share in our three focused businesses by more than one percentage point during 2024 and with good momentum since then. And in financing, good momentum of client onboarding and balanced growth contributed to a 23% year on year increase in income in U.

[C.S. Venkatakrishnan, Group Chief Executive & Director at Barclays]

S. Dollar terms in the second quarter, with particular strength in prime. So stable income streams now account for 40 of the investment bank's income in the past year, up from 29% in 2021. From this structurally stronger base, the investment bank is also better positioned to monetize cyclical market activity by helping clients to manage volatility as we demonstrated in the early part of the second quarter of this year. This cyclical activity is included in traditional areas of strength for us, such as credit and macro, and also in new areas of strength, such as equity derivatives and prime.

[C.S. Venkatakrishnan, Group Chief Executive & Director at Barclays]

Our work is not finished. With the ongoing execution of our plan, we will continue to produce structurally higher and more consistent returns for our shareholders. And with that, over to Anna to take us through the second quarter.

[Anna Cross, Group Finance Director at Barclays]

Thank you, Venkat, and good morning, everyone. Slide five summarizes the financial highlights for the second quarter and 2025. Before going into the detail, I would remind you how our results are affected by FX rates. The year on year performance in Q2 was impacted by a weaker US dollar, which decreased our reported income, costs and impairment. I'll call out these effects where appropriate.

[Anna Cross, Group Finance Director at Barclays]

The group delivered a Q2 RoTE of 12.3% against the previous year's 9.9%. Excluding the effect of last year's business disposal losses, income rose 9% with growth across all divisions, while our efficiency actions led to another quarter of positive jaws of 4%. Profit before tax increased by 28% year on year to GBP 2,500,000,000.0, and our earnings per share grew 41%, supported by the effect of share buybacks. As ever, I am focused on four aspects of performance, income stability with an emphasis on growth, cost discipline and progress on efficiency savings, credit performance, and a robust capital position. By focusing on these four building blocks, we are now driving higher returns on a sustainable, predictable, and consistent basis.

[Anna Cross, Group Finance Director at Barclays]

And from this strong foundation, I am now looking for signs of increasing momentum across our businesses, which I'll call out as we go, starting on Slide seven. Income in Q2 increased 14% year on year to 7,200,000,000.0. We grew stable income streams by 13% year on year, supported by sustained retail and corporate NII growth and 15% growth of financing income within markets. Elsewhere in the investment bank, our multiyear investment meant we were well positioned to help clients navigate volatility April and throughout the quarter. Group net interest income increased 12% year on year in Q2 to 3,100,000,000.0.

[Anna Cross, Group Finance Director at Barclays]

Stable deposits for the group supported continued reinvestment of the structural hedge alongside lending momentum. Within this, we have consistently taken market share in UK corporate bank deposits and lending since 2023 and year to date. And in Barclays UK, we maintained our share in current accounts and chose to remain disciplined on term deposit pricing in the quarter amid strong competition. The overall stability of deposits will support growth of the structural hedge income as we show on Slide nine. Income from the structural hedge is material and predictable and underpins our confidence in delivering NII guidance for the group and Barclays UK in 2025.

[Anna Cross, Group Finance Director at Barclays]

And beyond 2026, we currently expect the structural hedge to deliver multiyear NII growth. We have now locked in GBP 11,100,000,000.0 of gross structural hedge income in 2025 and 2026, up from GBP 10,200,000,000.0 last quarter. As we said in April, our plan assumes that we reinvest 90% of maturing hedges at a 3.5% yield. In each case, the Q2 outcome was more favorable than these assumptions. On rates, we locked in hedges at a higher rate at circa 3.7%, and we kept hedge balances flat, as you can see on Slide 35 in the appendix, reflecting the continued stability of hedgeable deposits.

[Anna Cross, Group Finance Director at Barclays]

Moving on to costs. The group cost to income ratio was 59% in Q2, down four percentage points year on year. Total costs increased by $219,000,000 year on year or 5%, which includes a circa GBP 100,000,000 increase in investment costs, mainly from the acquisition of Tesco Bank and associated integration costs. The effects of business growth, inflation and other investments on the cost base were largely offset by gross efficiency savings. Structural cost actions in the first half were around GBP 100,000,000, down slightly versus H1 twenty twenty four.

[Anna Cross, Group Finance Director at Barclays]

Looking ahead, we expect structural cost actions to be skewed towards the second half of the year and to be towards the top of the GBP 200 to GBP 300,000,000 normal annual range. Inclusive of these costs, we remain well positioned to deliver a circa 61% cost income ratio in 2025, in line with guidance and the high 50s target in 2026. Turning now to impairment. The Q2 group impairment charge of GBP $469,000,000 equated to a loan loss rate of 44 basis points. The UK credit picture remains benign with low and stable delinquencies in our consumer books and wholesale loan loss rates below our through the cycle expectations.

[Anna Cross, Group Finance Director at Barclays]

The Barclays UK charge was GBP 79,000,000 in Q2, resulting in a loan loss rate of 14 bps. The improvement versus Q1 reflected a release of credit card provisions and diminishing post acquisition stage migration effect for Tesco bank balances. The U. S. Consumer bank impairment charge of GBP $312,000,000 was stable year on year and down 22% versus last quarter.

[Anna Cross, Group Finance Director at Barclays]

The acquisition of General Motors card balances is expected to lead to a circa GBP 100,000,000 day one charge in Q3 and a post acquisition stage migration charge of circa GBP 50,000,000 for the next few quarters from Q4. Including this charge, we continue to expect a group loan loss rate within the through the cycle guidance of 50 to 60 basis points for FY 2025. Focusing on the U. S. Consumer Bank, ninety day delinquencies were stable in the quarter, whilst 30 delinquencies fell 20 basis points to 2.8%, consistent with normal seasonal trends.

[Anna Cross, Group Finance Director at Barclays]

The loan loss rate of four fifty six basis points increased by 18 basis points year on year, reflecting modestly higher write off. Consumer behavior remains resilient with payment rates in our book above pre COVID levels and consistent with Q1 and a stable mix of new account acquisitions as can be seen on Slide 39 in the appendix. I said I would highlight signs of increasing momentum, which we are seeing. So turning to our UK businesses on Slide 13. We are on track to deploy GBP 30,000,000,000 of business growth RWAs in The UK by 2026, having achieved GBP 17,000,000,000 so far, including GBP 10,000,000,000 organically.

[Anna Cross, Group Finance Director at Barclays]

During 2024, the three UK businesses delivered circa GBP 1,500,000,000.0 of organic business RWA growth per quarter on average. This has accelerated to circa billion per quarter in half one twenty twenty five. Given the momentum that you can see on the slide, we expect this growth to continue. Mortgage balances have grown for the past four quarters and strong purchase activity continues to support resilient demand. This includes stronger demand for higher LTV products, including through Kensington, where application margins are around four times higher than comparable Barclays branded mainstream mortgages.

[Anna Cross, Group Finance Director at Barclays]

In credit cards, the organic acquisition of 1,600,000 customers in the past eighteen months has supported consistent balance growth, and we expect this to lead to higher interest earning lending from half two twenty twenty five as promotional balances mature. Core business banking lending has started to inflect with a headwind from COVID era loan repayments diminishing. This growth has been supported by GBP 1,600,000,000.0 of loans provided to UK business banking customers in half one, up 50% year on year. And UK corporate bank lending has grown for the past three quarters as clients continue to draw down lending facilities. Given momentum across these products, we remain confident in achieving the GBP 30,000,000,000 target in 2026.

[Anna Cross, Group Finance Director at Barclays]

This implies a little over GBP 2,000,000,000 of growth per quarter, modestly above the recent run rate. Turning now to Barclays UK in more detail. You can see financial highlights on Slide 14, but I will talk to Slide 15. ROCE was 19.7 in the quarter. NII of GBP 1,900,000,000.0 increased 16% year on year and 2% quarter on quarter with NIM stable versus Q1.

[Anna Cross, Group Finance Director at Barclays]

We remain confident in our guidance for NII to exceed 7,600,000,000.0 in 2025, which in turn means more than GBP 3,900,000,000.0 in the second half of the year. Reinvestment of the structural hedge will continue to support material and predictable NII growth alongside sustained lending momentum. In addition, we expect a neutral or positive contribution from the product margin in Q3 and Q4. This partly reflects the benefit of promotional card balances translating into higher interest earning lending in half two. In addition, as an accounting matter, the phasing of some historic swap maturities suppressed product margin in half one.

[Anna Cross, Group Finance Director at Barclays]

This was known when we upgraded our guidance for NII last quarter and will not repeat in future as these swaps expire. We would therefore encourage you to look at H2 twenty twenty five as a reasonable baseline for NII dynamics beyond 2025, noting that NII is expected to build in Q3 and Q4. Non NII of GBP $264,000,000 rose modestly versus Q1, and we continue to expect a quarterly run rate above $250,000,000. Cost growth of 14% reflected the acquisition and subsequent ongoing integration of Tesco Bank. As a reminder, we expect the cost to income ratio for Barclays UK to increase this year from 52% in 2024 before falling to circa 50% in 2026.

[Anna Cross, Group Finance Director at Barclays]

Moving on to the Barclays UK balance sheet. Deposit balances fell by GBP 1,800,000,000.0 in the quarter as customers took advantage of favorable term deposit rates around the new ISO season. We were disciplined around pricing for term deposits, which was competitive in the first half of the quarter. This dynamic moderated later in the quarter, and our market share in current accounts has remained stable. Lending once again grew by GBP 1,600,000,000.0 quarter on quarter, driven by mortgages and credit cards.

[Anna Cross, Group Finance Director at Barclays]

Mortgage redemptions will increase in half two versus H1, but our recent retention experience and the momentum that we are seeing underpin our confidence in sustained loan growth. Moving on to UK Corporate Bank on Slide 18. Q2 RoTE was 16.6%, inclusive of a 39,000,000 litigation and conduct charge. This charge was in relation to a historic issue and drove a 19% year on year increase in costs in this business. Excluding this, costs increased by 2%, while income grew 17%.

[Anna Cross, Group Finance Director at Barclays]

NII was up 21% year on year, reflecting deposit and lending growth and the benefit from structural hedge reinvestment. Operationally, investments into our digital and lending propositions have helped to attract around three thirty new clients during H1 twenty twenty five and circa eight eighty new clients in the first half of the three year plan. Turning now to Private Bank and Wealth Management. Q2 RoTE was 31.9%. Net new assets under management of GBP 900,000,000.0 helped support 8% year on year growth in client assets and liabilities despite a weaker U.

[Anna Cross, Group Finance Director at Barclays]

S. Dollar. And annualized growth of 11% since 2023 is in line with our double digit growth target. Within the quarter, growth of assets under supervision offset a reduction in short term deposits held at the end of Q1. Income growth of 9% matched cost growth of 9%, resulting in a broadly stable cost to income ratio.

[Anna Cross, Group Finance Director at Barclays]

As previously guided, we are continuing to invest in this business, underpinning sustained growth and a high 60s cost to income ratio in 2026. Turning now to the Investment Bank. ROCE was 12.2% in Q2 and fourteen point two percent in half one. Total income was up 10% year on year, which, coupled with broadly stable RWAs now for three point five years, drove an 80 basis point improvement in income over average RWAs to 6.7%. We continue to be similarly disciplined on costs, which rose 2%, resulting in another quarter of positive jaws and a cost to income ratio of 59%.

[Anna Cross, Group Finance Director at Barclays]

Using the US dollar figures to help comparisons to US peers, market income was up 34% year on year. As Venkat mentioned, the growing breadth and depth of our client relationships are supporting structurally higher income while better positioning the investment bank to monetize cyclical activity. Our performance in q two helps to demonstrate this. In April, for instance, we monetized cyclical market activity by supporting clients through the period of volatility. But in May and June, structural improvements in the business enabled a higher daily income run rate in markets versus last year despite more normalized volatility.

[Anna Cross, Group Finance Director at Barclays]

This was supported by momentum of more stable financing income, which grew 23% year on year in US dollar terms. This occurred across financing products with particular strength in prime, supported by growth in balances and wider spreads. We also delivered this performance whilst managing risk well, maintaining stable VaR and incurring two trading book loss days, one in April and one in May, in line with the average since 2019. Looking at our income by product, SIC rose 35%, reflecting growth across the credit and macro franchises and in financing. The mix of our macro business weighted towards rate and FX was well suited to activity in the quarter.

[Anna Cross, Group Finance Director at Barclays]

Equities income was up 34% driven by strength in cash, prime and equity derivatives. In banking, the environment was quiet in April, but improved in May and June, and our half one market share was stable at 3.4%. Banking income fell 10% in the quarter, reflecting the year on year effect of a large ECM transaction in Q2 twenty twenty four. Looking through this effect, ECM activity gained momentum towards the end of Q2 with Barclays acting as book runner on seven of the top 12 U. S.

[Anna Cross, Group Finance Director at Barclays]

IPOs in the quarter. In DCN, we grew market share in all products and activity picked up as the quarter progressed, particularly in investment grade and the pipeline to leverage finance is encouraging. And whilst advisory activity has been subdued, our announced volumes are up nearly 40% year on year, which we expect to support stronger completed market share in the future. In transaction banking, income increased four percent, whilst corporate lending income was impacted by fair value losses on lending positions. Turning now to the U.

[Anna Cross, Group Finance Director at Barclays]

S. Consumer Bank. ROTE was 10.2% in the quarter, up from 9.2% in Q2 twenty twenty four. The business performed as we expected it to in the quarter, with operational improvements supporting our confidence in delivering a ROTE of greater than 12% in 2026. Total income increased 7% year on year in U.

[Anna Cross, Group Finance Director at Barclays]

S. Dollar terms, reflecting end net receivables growth of 5% to $33,900,000,000 on a managed basis. NIM expanded to 10.8%, and we expect continued momentum towards our greater than 12% target in 2026, reflecting three effects. First, asset repricing actions taken last year are supporting margins and will continue to feed through in the coming quarters. Second, we are growing higher margin retail balances as a percentage of net receivables from around 15% currently to circa 20% by 2026.

[Anna Cross, Group Finance Director at Barclays]

Third, we are improving our funding mix with retail deposits growing by $700,000,000 quarter on quarter or twenty seven percent year on year, increasing the share of funding from core deposits to 73%. The acquisition of General Motors Cards receivables is also expected to enhance ROCE from Q4 twenty twenty five despite the GBP 50,000,000 stage migration charge in the quarter that I mentioned earlier. We continue to complement income growth with efficiency, driving a two percentage point improvement in the cost to income ratio to 48%, on track for our mid-40s target by 2026. Moving to capital. We ended the quarter in the upper half of the 13% to 14 target range with a CET1 ratio of 14%.

[Anna Cross, Group Finance Director at Barclays]

This is a deliberate consequence of the strategy, which was designed to drive higher and more consistent returns, improved capital generation and higher shareholder distributions. We generated around 100 basis points of capital from attributable profits in H1 and expect around 170 basis points this year aligned to our circa 11% RoTE target. This enabled us to increase distributions by 21% year on year in half one to GBP 1,400,000,000.0, in line with our guidance to deliver a progressive increase in total distributions in 2025 versus 2024. This included an announced GBP 1,000,000,000 share buyback, which will reduce the reported ratio by circa 30 bps to 13.7%. RWAs were broadly flat at GBP $353,000,000,000, net of a 5,800,000,000 reduction due to FX.

[Anna Cross, Group Finance Director at Barclays]

Barclays UK and the UK Corporate Bank saw a combined RWA increase of $2,200,000,000 Given our continued discipline, investment bank RWAs remained broadly in line with the Q1 level and represented 56% of the overall group RWAs. Looking ahead, we note that some European banks have recently provided detail on the effect of output floors, which for Barclays are not expected to be binding at any point. This reflects our business mix and applies at both the group and the ring fence level. As usual, a word on our overall liquidity and funding on Slide 28. We have strong and diverse funding, including a 74% loan to deposit ratio and a net stable funding ratio of 136%.

[Anna Cross, Group Finance Director at Barclays]

And we are highly liquid across currencies with an average LCR of a 178% incorporating the initial effect of methodology changes introduced in June. Although these changes will utilize some of the group's GBP 135,000,000,000 surplus funding position, we expect the LCR to remain broadly within levels reported in recent years. These measures reflect purposeful and prudent management of our balance sheet and risk, delivering resilience and capacity to support customers in a range of economic environment. TNA per share increased 12p in the quarter and 144p year on year to 384p. Attributable profit added 10p per share during Q2, and the unwind of the cash flow hedge reserve added 9p.

[Anna Cross, Group Finance Director at Barclays]

We expect the majority of the remaining cash flow hedge reserve to unwind by the 2026. This unwind, combined with earnings growth and buybacks, give us confidence that TNAV will continue to grow consistently as it has done for the last eight quarters. So to summarize, we are pleased with the strong performance of the bank in the first half of the year, which sets us up well to deliver on all our 2025 guidance and 2026 targets. Over to you, Venkat, for concluding remarks.

[C.S. Venkatakrishnan, Group Chief Executive & Director at Barclays]

Thank you, Anna. So halfway into the three year plan, as you can see, we remain firmly on track to deliver our goals. We are working hard to deliver sustainable operational and financial improvements across our businesses, and this, in turn, will drive higher group returns and shareholder distributions. And as we have said, 2026 is a point in time for us, and we have ambition beyond it. By making structural improvements, we are improving the profit signature of the bank to drive higher returns in the years to follow. I will now open for questions and answers.

[Operator]

Our first question today comes from the line of Alvaro Serrano from Morgan Stanley. Please go ahead. Your line is now open.

[Alvaro Serrano Saenz de Tejada, Managing Director at Morgan Stanley]

Hi, good morning. A couple of questions, please. First of all, on capital and then one on the Investment Bank. On capital, you're at 13.7% sort of, obviously, after the buyback. That's a pretty comfortable position given your twenty thirteen to twenty fourteen FRTP has been delayed.

[Alvaro Serrano Saenz de Tejada, Managing Director at Morgan Stanley]

When you think about that your capital position versus the over €10,000,000,000 distribution and obviously, and A options that you've appeared on the press contemplating. How do you see upside to distribution versus additional firepower for M and A, whether that's a portfolio in The U. S. Or something else? If you can maybe sort of walk us through your thinking.

[Alvaro Serrano Saenz de Tejada, Managing Director at Morgan Stanley]

And second, on the Investment Bank, obviously, you've explained, Anna, very strong, clearly doing better than U. S. Peers, and that's worked very well. But investment banking fees, not so well. So if in a world where we seem to be heading, famous last words, to lower volatility environment, I know you've touched on it at the end of the quarter, but I'm just sort of if you can elaborate if that low volatility banking fees picking up thesis has held at the later part of the quarter? And as we look into the rest of the year, can we still expect sort of decent growth in that in a low volatility environment, I. E, banking fees making up for whatever of normalization of global markets we might see? Thank you.

[Anna Cross, Group Finance Director at Barclays]

Good morning, Alvaro. Thank you very much for kicking off the call for us. I'll take the first question, and then I'm going to hand to Venkat. So look, our capital position just reflects the execution of the strategy. The strategy is designed to create higher, more consistent returns, which in turn allows us to return more to shareholders and indeed invest in the business, and and that's really what you're seeing here.

[Anna Cross, Group Finance Director at Barclays]

It's exactly what we expected. So as you call out 13.7 post the buyback, we indicated at the beginning of the year that actually, we expected to operate towards the upper half of our capital range just because of the pillar two that we're carrying in advance of The US model, being implemented. So we're exactly where we expected to be. And, you know, the broader aspects of your question, I would say, the capital hierarchy remains completely intact. So we're generating higher levels of capital from more consistent and higher returns, And our priorities are, number one, of course, regulatory.

[Anna Cross, Group Finance Director at Barclays]

Number two, distributions. Those distributions are up 21% year on year. The buyback is up 33% year on year. And we said that the distributions should be progressive in 2025. That's what you're seeing.

[Anna Cross, Group Finance Director at Barclays]

And, of course, our guidance and target for the three years is at least ten. So that all remains intact. And then finally, you know, continuing to invest in The UK businesses, we do believe our plan is an organic one. And you can see at the halfway point, we put down 17,000,000,000 of the 30,000,000,000 RWAs that that we are planning to. So that's how we feel about capital.

[Anna Cross, Group Finance Director at Barclays]

Really no change, just the execution of the strategy. Venkat?

[C.S. Venkatakrishnan, Group Chief Executive & Director at Barclays]

Yeah. Hey. Thanks for the question, Alvaro. On the investment bank so let me give you a longer term view, and then I'll come to your very specific question. So on the investment bank, over the last six quarters, in fact, since before then, we've been obviously investing in our structural capabilities.

[C.S. Venkatakrishnan, Group Chief Executive & Director at Barclays]

What you see in the results in the investment bank is a combination of deep structural improvements, which we think are sustainable over the long run, and then cyclical aspects, which benefited the trading business and may have been a headwind for the banking business. And then I'll come to that. So on the structural side, basically, you're seeing deeper client engagement. You know, one of the statistics we put out was we're number six investment bank. So of our top 100 clients, who are we in the top five with?

[C.S. Venkatakrishnan, Group Chief Executive & Director at Barclays]

That number was 49 before the plan started. Our target is 70. We are at 60 now. You can see it in the market shares which we have in global markets. Financing is up 23% year on year in U.

[C.S. Venkatakrishnan, Group Chief Executive & Director at Barclays]

S. Dollars. Our three focus areas are up by one percentage point, 24 versus 23, and that's the latest data we have. And then I mentioned the top five clients. And then when you look at the overall and then when you look at banking, capital discipline has really taken root.

[C.S. Venkatakrishnan, Group Chief Executive & Director at Barclays]

Return on risk weighted assets is improving. And market share has improved, although a little slower this year. So that is the structural benefit that we see. And you can see it in the results when you look at the investment bank's performance versus consensus. The six quarters now we've beaten consensus, and the size of that beat has been growing to about 300 odd million pounds this quarter.

[C.S. Venkatakrishnan, Group Chief Executive & Director at Barclays]

So I think what you're seeing is the combination there of both structural and cyclical. So let me come to cyclical. Cyclical in the markets business has been helped obviously by volatility, and that's been a tailwind. And in banking, as you point out, as decision making has slowed, that volatility has been a bit of a headwind. Now looking forward, we are seeing that headwind in banking dissipating as there is more deal activity, and we expect that to continue.

[C.S. Venkatakrishnan, Group Chief Executive & Director at Barclays]

As for markets, I think a lot of the positioning that's taken place in the last six months has been in reaction to immediate volatility, so what I would call shorter term risk management. And that has obviously delayed longer term decision making, which drives banking. Now, though, in the market side, you could see more longer term positioning and decision making as people take a take a clearer view on different asset classes and within asset classes rotation. I hope and expect, given all the structural improvements I outlined, that we will benefit from that.

[Anna Cross, Group Finance Director at Barclays]

Thank you, Alvaro. Perhaps we can go to the next question, please, operator.

[Operator]

The next question comes from Guy Steppings from BNP Paribas. Please go ahead. Your line is now open.

[Guy Stebbings, Executive Director - European Banks Research at BNP Paribas Exane]

Hi, morning there. Two questions, if I may. The first one was on Barclays UK. Just wondering if you could expand on this historic swap maturity impact that landed in H1 that comes out in H2 and should support expansion in the product margin in the second half. Don't know if you can sort of frame the size of that perhaps.

[Guy Stebbings, Executive Director - European Banks Research at BNP Paribas Exane]

And then attached to that, looking at your full year guide and talk to quarter on quarter growth, it looks like we'll get into a sort of exit quarter run rate of about $8,000,000,000 or so on the NII for Barqs UK consensus at 8,300,000,000.0 for next year. It doesn't feel overly challenging versus that sort of exit rate. So can we infer that you're comfortable with market expectations next year, perhaps even some upside despite the miss in the second quarter? And then the second question was on The U. S.

[Guy Stebbings, Executive Director - European Banks Research at BNP Paribas Exane]

Consumer business on the impairment side, encouraging to see that step down impairments in Q2 and the lower thirty day delinquencies. Perhaps I can invite you to comment on how you're thinking about impairments in the second half and beyond on that book. Mean, I there had been some skepticism that the 2026 impairment guide could be challenging to get to that sort of 400 basis points long run. So are you sort of more confident on delivery there today than perhaps three, four months ago?

[Anna Cross, Group Finance Director at Barclays]

Okay. Thanks, Guy. Why don't I, take both of those? And I'm sure Venkat may add on the second. So let me start with, BUK NII in totality.

[Anna Cross, Group Finance Director at Barclays]

So we are confident in the greater than 7,600,000,000.0. And when we gave you that guidance, we were clearly aware of the swap, the swap matter that you're talking about here. So the phasing is panning out as we expected it to, and therefore, that means by definition, we're expecting income to be in excess of 3,900,000,000.0 in the second half of the year. And within that, I would just add for q four to be higher than q three, and I'll I'll come back to the second part of your question in a minute. So, what really drives that?

[Anna Cross, Group Finance Director at Barclays]

Well, there's clearly the things we talked about, which is the structural hedge loan growth. So you can see the momentum in BUK. The other thing I would just call out as a product margin matter, Guy, is is is not just this swap effect, but it's also the fact we expect to see maturing cards balances, maturing promotional cards balances in the second half of the year. And, obviously, we expect to see deposit trends to continue to mitigate. But this swap point, it's a historic matter, and it's an accounting point, and it's accounting timing.

[Anna Cross, Group Finance Director at Barclays]

And it basically relates to, the the maturity profile of historic swaps versus how we recognize swaps against products internally. It's purely timing. To try and put, some quantum around it, what I would say is, it's probably most of the consensus miss in q two, and it was relatively similar across q one and q two. So it's a half one versus half two point. It's now behind us.

[Anna Cross, Group Finance Director at Barclays]

It's not operational, purely accounting timing. And from '22 onwards, we're now booking our swaps in a different way, so I'm not expecting this will recur. So in terms of the jumping off point, as I said in my prepared remarks, please use half two as a jumping off point for NII next year, and within that note, the q three, q four momentum. It's a bit too early to talk about explicit numbers or consensus for next year, but just please note from this, I guess, our confidence in terms of that building NII momentum, not just in meeting 25 guidance, but underpinning RoTE in 2026 and having momentum even beyond, beyond that point. So let me now come to US consumer impairment.

[Anna Cross, Group Finance Director at Barclays]

Look. It's fallen q on q as we would have expected it to seasonally, and you can see that, 30 delinquencies are down 20 basis points. So so it's performing well. Interestingly, within that, the lowest three FICO bands are also down year on year in delinquency, which I see as encouraging. What we expect in the second half is obviously normal seasonal trends.

[Anna Cross, Group Finance Director at Barclays]

You tend to see a build towards the back end of the year just as holiday spending picks up. The only other notable thing I would call out is obviously in q three, we onboard, the General Motors, back book. You should expect to see a £100, day one charge then, and then you're gonna see some migration effects, probably about £50 per quarter for a few quarters just because we onboard things at stage one. But overall, I think within the context of the group guidance of 50 to 60 basis points, we're we're very comfortable. Benkat, anything?

[C.S. Venkatakrishnan, Group Chief Executive & Director at Barclays]

Yeah. Look. I'll just add at a broader macroeconomic level, It has been remarkable really quite how resilient The US economy has been, and indeed The UK economy to everything that's going on in tariffs. Obviously, there is inflationary pressure, but employment remains very strong. And and, you know, I mean, the Fed is having having a meeting tomorrow, but it's not cut once so far this year.

[C.S. Venkatakrishnan, Group Chief Executive & Director at Barclays]

So I think we have to see how that plays out. But I would say at a macroeconomic level, there is room for for hope in the strength of the economy, especially as the frequency of tariff announcements and the amplitude of tariff changes reduce. Both frequency and amplitude reduce.

[Anna Cross, Group Finance Director at Barclays]

Okay. Thank you, operator. Next question, please.

[Operator]

The next question today comes from the line of Jason Napier from UBS. Please go ahead. Your line is now open.

[Jason Napier, Head - European Banks Research at UBS Group]

Good morning, Venkat, and thanks for taking my questions. Two, please. The first, just focusing on the retained targets for 2026. I guess at the halfway point for the strategic plan, the bank's doing better than expected. Right?

[Jason Napier, Head - European Banks Research at UBS Group]

As Venkat, you mentioned, you've beaten in the IV six quarters in a row, and consensus is pretty close to your $30,000,000,000 revenue target for next year. But the market is well over $1,000,000,000 below your expectations for the investment bank. So I wanted to invite you to sort of give us your thinking on that $30,000,000,000 guide. Is it still that number because you're not in the habit of refreshing it every quarter? You know, is it that the cyclical tailwinds in the IB that you've enjoyed so far you think are really the headwind from here?

[Jason Napier, Head - European Banks Research at UBS Group]

Because if we put in your IB number, if we add that to consensus, you're a 13 RoTE company, not the sort of more than 12 at which we we seem to be a little bit stuck. And then secondly, perhaps, just as a follow on, consensus beyond 2026 has got the bank growing revenues by 3% and costs by two. I wonder whether just at a footprint level, do you think that makes sense? Are the markets in which you're playing growing that little in the next few years? Okay.

[Anna Cross, Group Finance Director at Barclays]

Thanks, Jason. I'm going to start and then hand to Venkat. So we've retained and indeed repeated our targets for '25 and and for 2026. And when we step back, we're clearly on a strong platform here. So at the end of the first half of this year, we're sitting on a on a 13% RoTE.

[Anna Cross, Group Finance Director at Barclays]

And we clearly got momentum across all five of of the businesses. And, really, this is what the strategy is about. So, you know, we we're not surprised by these results. Our objective was to drive income momentum and income stability whilst holding costs and capital discipline, and that's exactly what we're doing here, and you can you can see that in in the results. So clearly, what it does is it gives us, obviously, confidence for the current year.

[Anna Cross, Group Finance Director at Barclays]

But even more than that, it gives us confidence for 2026 and beyond as as a rotey matter. And income wise, you know, that being a specific part of your question, you know, what you're seeing here is is clear NII momentum as I covered in the in the previous conversation. Loan growth will underpin that. You're gonna see, you know, the maturation of card balances that will underpin that. You can see the structural hedge underpinning that.

[Anna Cross, Group Finance Director at Barclays]

And then elsewhere in the bank, you can see the progress that we are making structurally in the IB, both as a revenue matter and in terms of a a rating matter. So, you know, we believe that with each passing quarter, clearly, we're more confident and hopefully the market becomes so in in that delivery. Sort of beyond 2025 and 2026, so hopefully, you're starting to see a pattern here. The the strategy is not hard. As I said, it's about driving income and momentum and stability, keeping cost controlled, and being really disciplined about where we allocate our capital.

[Anna Cross, Group Finance Director at Barclays]

We're not gonna suddenly stop doing that at the 2026. So from our perspective, we expect to continue to driving that level of momentum. Venkat, you may wanna add the second.

[C.S. Venkatakrishnan, Group Chief Executive & Director at Barclays]

Yeah. Look, Jason, you've you've asked a question or two questions, which really hit at the heart of what our strategy and our strategic plan is. So one is, you know, what is the how how well are the businesses performing, and how are you getting that better performance? As Anna just said, there's a important part that is structural. We're just trying to run the place much better.

[C.S. Venkatakrishnan, Group Chief Executive & Director at Barclays]

And with deeper client engagement, greater efficiency in cost, greater revenue growth, strong risk controls. And, you know, we are very happy with the numbers we've seen over the first six quarters. We think the structural underpinnings, as Anna said, give us expectations to carry that forward, just into the next six quarters, but beyond that. So one part is running the bank better. The second part comes to the footprint as you put it, which is what are the businesses and where are they?

[C.S. Venkatakrishnan, Group Chief Executive & Director at Barclays]

Now a large at scale bank like us should grow at top line roughly at the nominal rate of the of the economies in which we are. And both in The UK and in The US, that nominal rate, you know, The US is running a 1% GDP growth real q four twenty five to twenty four. It's probably gonna be 2% next year. But, you know, with inflation at around four ish percent, call it a 5%, four and a half to 5% nominal growth, similar in The UK. So you would expect us, absent of capturing market share, to grow at roughly that level is what I would think in the long run a a good bank should do.

[C.S. Venkatakrishnan, Group Chief Executive & Director at Barclays]

That's not a target. That's not a forecast. That's but it's just saying to you that when you think about how our footprint is, right, that's a reasonable assumption to stop it.

[Anna Cross, Group Finance Director at Barclays]

Very much. Thank you, Jason. Perhaps we can go to the next question, please, operator.

[Operator]

The next question today comes from the line of Rob Noble from Deutsche Bank. Please go ahead. Your line is now open.

[Robert Noble, Banks Analyst at Deutsche Bank]

Hi. Hi. Thanks for taking my questions. Can I just ask on the, promotional cards? Aren't they booked at effective interest rates? So why would you get a pickup in H2 from there? And if you could just elaborate on the size of the balances on promotional, how much is rolling, what the EIR rate is? Secondly, I think there's been sort of one quarter's growth in the last eight in The UK deposit book. And I presume a couple of years ago, that wasn't the plan. So what's not working there? What's going what could be improved to turn the deposit to give you the confidence for it to be stable going forward? And then lastly, how big is the Kensington book now?

[Robert Noble, Banks Analyst at Deutsche Bank]

What's it growing at? And who and who are you taking share from in that business?

[Anna Cross, Group Finance Director at Barclays]

Okay. Thanks, Rob. I I will take those. Well, I'm not gonna go into the details of of EIR assumptions. But what I would say is that when when we do reflect effective interest rates across our cards books, we do we do so conservatively, as we do across all of our businesses.

[Anna Cross, Group Finance Director at Barclays]

And typically, what we're doing there is we're we're showing, we're we're spreading the upfront fee, but we're also, reflecting a bit of post promotional balances. But, actually, what we're seeing is the 24 cohort, maturing nicely, and that's really what we're calling out here. In terms of UK deposits, we're broadly following the trends of our peers. Current accounts market share is being, maintained, And you can see that we are not encountering anything unexpected simply because we're rolling a 100% of the hedge. You know, our planning assumption is 90.

[Anna Cross, Group Finance Director at Barclays]

We rolled a 100% of it in the in the second quarter, so that tells you that things are are broadly panning out. We continue to see some deposit migration, but that is, you know, the ice season aside, that continues to just normalize. So nothing unexpected here. And on Kensington, you know, we're seeing now high loan to value mortgages occupy about 25% of our flow. That's up from around 15% a couple of years back.

[Anna Cross, Group Finance Director at Barclays]

I won't call out Kensington balances specifically, but they are being very, very helpful in helping us address the full scale, the full breadth of the market mortgage market, which is why we are now taking gross share a little head of stock. Retention is very good. And, of course, what's notable about Kensington is is the margins are much richer. They're about on equivalent products. They're about four times, the the scale of a of a of a normal b u k, mortgage margin.

[Anna Cross, Group Finance Director at Barclays]

So we're really pleased with its performance, and it's fully integrated now into into the business.

[Robert Noble, Banks Analyst at Deutsche Bank]

Thank you.

[Anna Cross, Group Finance Director at Barclays]

Okay. Thank you. Perhaps we can go to the next question, please.

[Operator]

The next question comes from Chris Can't from Autonomous. Please go ahead. Your line is now open.

[Christopher Cant, Head of Banks Strategy at Autonomous Research]

Good morning. Thanks for taking the questions. I had a couple on regulation, please. So firstly, thinking about what's happening in The U. S.

[Christopher Cant, Head of Banks Strategy at Autonomous Research]

If we get these ESLR changes and your U. S. Competitors have effectively significantly more leveraged balance sheet capacity handed to them and they seek to deploy that in markets, how should we think about the effect of that on the IB growth you've seen over the last five, six years, particularly around financing? Do you see that as a competitive threat? And what can you do about it if those peers now have more capacity to muscle in?

[Christopher Cant, Head of Banks Strategy at Autonomous Research]

And with regards to CCAR and The U. S. Consumer business, the reasoning you've given for retaining that business in the past is partly because it helps your CCAR performance. Obviously, CCAR is getting more benign. Do you now feel less compelled to to retain that business?

[Christopher Cant, Head of Banks Strategy at Autonomous Research]

What what is the what is the argument for for keeping that? And on The UK side of the fence, if I could just invite you to comment on what, if any, outcomes we might expect from the current UK capital framework review that's happening in in the background. Are you expecting that to be a positive? And Vencat, I know you've expressed some views contrary to your peers at other banks around the ring fencing regime. What are your updated thoughts given the changes we may see there? Thank you.

[Anna Cross, Group Finance Director at Barclays]

Thanks, Chris. So I will start on the first two of those, and then I'll I'll hand to to Venkat for the third point on The UK capital framework. Look. On SLR, we note peer comments. We're confident in our ability to continue to grow our prime business and indeed our fixed income financing business.

[Anna Cross, Group Finance Director at Barclays]

We're seeing that continue, you know, good balance growth, good spreads, and actually expanding a bit into Asia, which is relatively new for us. So very much open for business and confident in our ability to grow. And really what's underpinning that is a couple of things. Firstly, as we look at our US peers, it looks like the the, you know, leverage is not binding for all right now. So this may or may not make a significant amount of business, of of difference rather.

[Anna Cross, Group Finance Director at Barclays]

And and secondly, we look forward to to what the FTC might do in in The UK that looks at the framework more holistically So no specific concerns. On CCAR, Barclays in The US typically has a good CCAR results and has exactly the same this year, you know, a low point of 10.8%, a draw stress buffer of 3.3%. And, you know, we still see that diversified banks across that CCAR stack get a better result, and that is very, very clear. There were some aspects of this year's CCAR stress test where the market shock component was a little lower than we might have, previously seen.

[Anna Cross, Group Finance Director at Barclays]

We can't always anticipate that that will be the case. So important that we don't react to one stress test in isolation. And just stepping back, you know, this is a business that we believe we can improve the returns on. You can see that. We believe we can get the returns not just to be in line with the group, but more towards mid teens.

[Anna Cross, Group Finance Director at Barclays]

And it offers, you know, income and geographic diversification as well as the particular capital efficiency point. So that's how we feel about cards. Venkat, do you wanna

[C.S. Venkatakrishnan, Group Chief Executive & Director at Barclays]

Yeah. Moving to The UK, you know, first of all, I welcome the broader capital framework, review that was announced recently. And I think I welcome it in two ways. One is it's an important topic. And the second is it's looking at the entirety of it, which is not just capital rules itself, but stress testing and everything that goes into the final number.

[C.S. Venkatakrishnan, Group Chief Executive & Director at Barclays]

And the way I think about it is that capital and capital regulation is an important part of a healthy banking system and of growth. And so it is what you do to to run a robust banking system. Ring sensing is an important it's a bedrock of depositor protection. And what it helps is with the so called gone concern. It's a will.

[C.S. Venkatakrishnan, Group Chief Executive & Director at Barclays]

It is if a bank has a problem like Icelandic banks did in 02/1978, then how do you make sure that depositors get their deposits back over and above the protection scheme? And what can you do in terms of of the assets that are attached to those deposits? You know, the governor of the Bank of England a few weeks ago spoke with the treasury select committee, and he made a point that about 99% of assets from ring fenced banks are deployed within The UK, and 32% of the corresponding assets from non ring fenced banks are deployed in The UK. That's the illustration of the problem. So that's why I continue to believe strongly in the maintenance and sustenance of that reference as it is structured.

[C.S. Venkatakrishnan, Group Chief Executive & Director at Barclays]

I mean, let's see what comes out of the government review, but that's that's that's my view certainly. And then on capital, as I said, that is part of growing the economy and growing the banking system. Now the governor made another point last week at the treasury select committee where he said there's no trade off between financial stability and growth. He's absolutely right. Financial stability is a.

[C.S. Venkatakrishnan, Group Chief Executive & Director at Barclays]

It's a necessity. But not all regulation necessarily contributes to financial stability, and that's where the debate is to be had. You know, which regulation is is excessive, superfluous gilding validity in the whole capital framework? And can you relax some of that regulation and improve growth? I'm optimistic for those outcomes.

[Anna Cross, Group Finance Director at Barclays]

Thank you. Thank you, Chris. Perhaps we can go to our next question, please, operator.

[Operator]

The next question comes from Jonathan Pierce from Jefferies. Please go ahead. Your line is now open.

[Jonathan Pierce, Equity Analyst at Jefferies]

Hello, both. Two questions, please. The the first is on these, additional structural hedge tailwinds that you've alluded to post 02/1926. The yield on the hedge at the moment is about two and a half percent. So if you take your guidance over the next eighteen months, we're probably exiting next year at about 3.2%.

[Jonathan Pierce, Equity Analyst at Jefferies]

If you're assuming a reinvestment rate of three and a half, where where's the where's the extra tailwind coming from into 2027 and beyond? Is it just a an averaging effect of the 2026 maturities, or or or is there something a bit more material going on? That's the first question. The second question, you can try again on capital if that's okay. At the moment, I understand you want to operate in the upper half of your 13% to 14% equity tier one target range.

[Jonathan Pierce, Equity Analyst at Jefferies]

Consensus though is is still a bit above 14% by the 2027. So how are you thinking this sort of pans out? I note your comments on pillar two a dropping with US IRB and Basel 3.1, and I suppose, you know, one for one, that would reduce your equity requirement by maybe 50 basis points. And then you've got this point on the SBC having a look and maybe something happens there elsewhere in the capital stack. Into the medium term, would it be unreasonable to assume that you could operate towards the lower end?

[Jonathan Pierce, Equity Analyst at Jefferies]

That's a 13% to 14% range. Because obviously, the delta there versus consensus would be worth about £4,000,000,000, which is not immaterial. Thank you.

[Anna Cross, Group Finance Director at Barclays]

Thanks, Jonathan. The so the the comment on the on the structural hedge tailwinds is is this. And it it's just to help people sort of think beyond, I guess, the targets that we've already given you for for 2026 and to understand how we feel about NII, growth through 2026 and and beyond. But the the average yield on the structural hedge in 2027 will still be below three and a half percent. Simplistically, that is what we're saying.

[Anna Cross, Group Finance Director at Barclays]

There's not there's nothing funny or quirky or anything in the in the kind of '26 maturities. It's it's literally that simple. That that's what we're drawing out there. I think the other point that we are drawing out this time that's perhaps a little bit different is the locked in level of that hedge. So remember that that this year and you can see it on the the structural hedge slide on slide nine.

[Anna Cross, Group Finance Director at Barclays]

The locked in amount for this year is 97% and and, you know, a bit lower than that next year, but you can see us really getting good line of sight, of that 80%. So to your second question, look. From our perspective, we still think 13 to 14% is the right target range for us. We plan across multiple, multiple years when it comes to capital. There are a few regulatory moving parts out there, whether that be what the FTC is doing.

[Anna Cross, Group Finance Director at Barclays]

Obviously, don't know what is happening yet on Basel three, in terms of, pillar two a. We also don't know what's happening in terms of sort of international alignment. So there's a lot on the regulatory front but it's still uncertain. What's important to us is that we're delivering on our distributions as we currently set them out, so at least, 10,000,000,000, and you can see that prioritization that that we're doing there. But fundamentally, the plan was designed to create a higher returning bank.

[Anna Cross, Group Finance Director at Barclays]

And importantly, what you're seeing now is a bank with higher returns and higher capital. That is really, really important for the consistency not only of shareholder distributions, but our ability to invest in the businesses longer term. So, you know, we we are happy with the range that we've got, and and we'll just await regulatory clarity when it comes.

[Jonathan Pierce, Equity Analyst at Jefferies]

Understood. I don't suppose any chance you could tell us what the maturity yield on the hedges is in 02/1927.

[Anna Cross, Group Finance Director at Barclays]

Not off the top of my head. You know, the the average is about is about three, but we'll we'll we'll come back to you if there's if there's anything that we can help you on the detail. Okay. Thank you. Okay.

[Anna Cross, Group Finance Director at Barclays]

Sorry, that's three years average rather than the specific maturing yield. But we'll come back to you. Okay. Right. Next question, please.

[Operator]

The next question comes from the line of Chris Hallum from Goldman Sachs. Two

[Chris Hallam, MD & Head - European Financials Research at Goldman Sachs]

questions on RWAs in the Investment Bank. I guess the dynamics here in Q2 feel similar to what we saw in Q3 last year, so U. S. Dollar depreciation Q on Q. Last year, you let that feed through to lower headline RWAs.

[Chris Hallam, MD & Head - European Financials Research at Goldman Sachs]

This quarter, that hasn't been the case. So I guess, what's changed there? This quarter, reinvesting the FX tailwind, you would have obviously seen a step down in RWAs as a percentage of group towards the target. You would have seen the CET1 tailwind, but then you also, I guess, would have missed out on some commercial opportunities. And I suppose being there for clients on the financing side continues to be an important part of the rankings improvements you flagged.

[Chris Hallam, MD & Head - European Financials Research at Goldman Sachs]

So how are you thinking about juggling those priorities given they may be at the margin a little bit mutually exclusive? And do you feel comfortable saying 56% is peak and it trends down from here? And then secondly, just a confirmation, I think, RWA productivity. There's a tick down in the second quarter. Obviously, Q1 was quite a high number.

[Chris Hallam, MD & Head - European Financials Research at Goldman Sachs]

Anything you want to call out in the quarter, maybe it's the ICB one offs Q on Q. And it feels like that level of RWA productivity is a level that would support the RoTE target for next year. So I just wanted to check that you agree with that. Thank you.

[Anna Cross, Group Finance Director at Barclays]

Okay. Thanks, Chris. Look, step back for a minute. The RWAs in the IRB have been broadly flat for three and a half years. That is our clear strategic intent.

[Anna Cross, Group Finance Director at Barclays]

And what we keep coming back to quarter after quarter after quarter. It's a key part of the plan and the capital discipline that we talked about. What you might see in any particular quarter is either higher or lower levels of client activity as we pass the quarter end, and it's honestly nothing more than that. You can see that we are very disciplined in the way that we manage our risk. You can see that in the bar and in the lost days.

[Anna Cross, Group Finance Director at Barclays]

So and if you look at the distribution of trading income, that's all on page 37. So we deployed more RWAs to to support clients, not really in taking materially more risk. That's what you should expect us to do, and we really don't feel that RWA discipline and growth in the IB are mutually exclusive. So since the beginning of the plan, the IB RWAs, as I said, well, more than the plan for two years before the plan started have been flat, and we've got an income CAGR of 9%. That's what we're trying to do here.

[Anna Cross, Group Finance Director at Barclays]

And I think you're seeing that flow through into the into the second part of your question, which is really about ROTE productivity. There's a clear seasonality to, the IB, generally, higher in q one, higher in q two, then q three and q four, typically. And and so you're seeing nothing more than a seasonal change. Year on year, it's up meaningfully, I think, 80 basis points, year on year. So, you know, what we're doing here, which is driving, capital discipline in banking and driving our focus businesses in markets is is working.

[Anna Cross, Group Finance Director at Barclays]

And what's really important to us, and it's probably the most important plan for part of the plan for me, is not just the returns in the IB, but the consistency of those returns. That's really important. So you're gonna see that, you know, hopefully, in the in the coming quarters.

[C.S. Venkatakrishnan, Group Chief Executive & Director at Barclays]

I'll just add not just consistency, but quality. So the consistency and quality go together. Right? As we do more in financing revenue, as we do more in corporate banking revenue, you get the consistency, but you're also getting more predictable high quality revenues. So endorse everything Anna just said, obviously.

[Anna Cross, Group Finance Director at Barclays]

Thank you. You. Thank you very much, Chris. Perhaps we can go to the next question, please, operator.

[Operator]

The next question comes from Andrew Coombs from Citigroup. Please go ahead. Your line is now open.

[Andrew Coombs, Equity Research Analyst at Citigroup]

Good morning. Thanks for taking my questions. One on The UK and one on The U. S, please. On The UK, I just wanted to come back to the deposit trends.

[Andrew Coombs, Equity Research Analyst at Citigroup]

You talked about being disciplined on term deposit pricing against very tough competition. If I took back over a longer period of time, your deposit balance is contracted in four to 5% of the last quarters. So perhaps you could just elaborate on how you think about margins versus volumes on that UK deposit book, what it would take for you to reengage in terms of pricing dynamics more broadly across the space? And then secondly, on U. S.

[Andrew Coombs, Equity Research Analyst at Citigroup]

Consumer, I wanted to ask about mix shift and what it means to your targets. If I look at your NIM in U. S. Consumer, impressive Q on Q improvement, up 30 basis points. At the same time, you're talking about a $50,000,000 additional charge over the next few quarters from Q4 on post acquisition stage migration from General Motors.

[Andrew Coombs, Equity Research Analyst at Citigroup]

Just given that mix shift that you've seen with AA coming out, General Motors coming on, what does it mean for your targets, the GBP 40,000,000,000 receivables, the greater than 12% NIM, the 400 basis points cost of risk in that division, and they are now subject to slight change? Thank you.

[Anna Cross, Group Finance Director at Barclays]

Thanks, Andy. I'll take both of those. So look, we had a similar question on deposit trends earlier in the call. There's nothing specific going on here. We feel like we're broadly following our peers in terms of, market share, particularly in current accounts, and you can see that, as I said, in the in the role of the hedge.

[Anna Cross, Group Finance Director at Barclays]

Let me specifically speak about fixed term deposits and and the ice season, which I think is probably what's underpinning your question. So but the ice season was very, very different this year. We can all, I guess, have a view about why that might be the case, but it was bigger and earlier than we've ever seen before. And if you look at the quantum of flows during the April, I think the April, the flows on those products were around 6,000,000,000, not for us, but for the market. Then if you look at the average of May and June, that's more like 1,000,000,000 a week. So that gives you an idea of the scale of flows. The pricing, we felt, was not economic, and therefore, we stepped back from fixed term pricing in that ISO season and remained disciplined.

[Anna Cross, Group Finance Director at Barclays]

We did, however, grow our ISO balances year on year and feel like we had a good season. So where we think it's important for the relationship, we do step into pricing, and you can see there's a divergence between our core pricing and our relationship pricing. And over time, you might see that, you know, you've seen it widening particularly through q two. So it is important to us, but, you know, we're not going to price, uneconomically in in the market whilst we have a a stable underlying base. Just moving to US consumer.

[Anna Cross, Group Finance Director at Barclays]

Look. We've said a number of times, it's a plan in many parts. It's about NIM. You're seeing NIM going up. Why is it going up?

[Anna Cross, Group Finance Director at Barclays]

Because we repriced the book last year and that's feeding through. It's also because, US deposits are up 27% in that business. The cost to income ratio is now 48 and it's headed downwards and risk is well controlled. So we are controlling everything that we can within that business and driving the operational discipline as we said we would in the plan. We clearly still have ambition to grow in the business, and we're looking for a balance, you might recall, of being roughly 15% in retail at the moment and moving much more towards 20% in retail.

[Anna Cross, Group Finance Director at Barclays]

And, actually, GM will fulfill a large part of that move for us. That will clearly flow into NIM and will give us a better risk adjusted return, which is what we are trying to do. So we do want to grow this business. We've gained one partner in GM. We've retained four, But Roti's the north star.

[Anna Cross, Group Finance Director at Barclays]

We're not going to grow it, you know, to meet a target and compromise Roti. And indeed, that's true of every single business across all five divisions. Okay. Thank you, Andy. Perhaps we can go to the next question please, operator.

[Operator]

Our next question comes from Amit Goel from Mediobanca. Please go ahead. Your line is now open.

[Amit Goel, Managing Director at Mediobanca]

Hi, thank you. So two questions. One, again, a follow-up on the product margin. I just want to check what your thinking is in terms of 2026, given there are a few more kind of parts to it versus '25, would you expect a positive contribution then? I guess I'm just thinking that, you know, in terms of the the broader guide, so there's the 7.6 in of NII in '25.

[Amit Goel, Managing Director at Mediobanca]

There's two thirds of roughly a billion, hedge benefit in '26. So, you know, that by itself gets you to kind of the 8.3 consensus NII. There's potentially a little bit of volume growth. So then the product margin is the is kind of the delta then? And then the second question, just on the IB, I mean, I think it was obviously a very strong performance in markets.

[Amit Goel, Managing Director at Mediobanca]

Costs were well contained. Just curious how you're thinking about investment then also into that business and managing that cost piece if revenues continue to be strong. Thank you.

[Anna Cross, Group Finance Director at Barclays]

Okay. Thank you, Emma. I'll take the first and then hand to Venkat for the second. As I said, it's a bit too early to talk about 2026 NII or particularly the product margin. And I just call out a couple of things, one on the numerator and one on the denominator.

[Anna Cross, Group Finance Director at Barclays]

So on the denominator, we we do intend to continue to originate assets, and you can see that coming through not only in our strong mortgage growth, so we've had four consecutive quarters of of mortgage growth on a net basis, and, you know, cars continue to grow. Now clearly, more mortgages in the mix will slightly dilute your margin, but only on a mixed basis, higher NII, of course. So think growth in assets, but I would call out this this maturity of the cards and promotional cards balances. We said it would start in '25. Actually, the longer maturities, which is the the the larger part of the promotional balance mix, really starts to mature in '26 and beyond.

[Anna Cross, Group Finance Director at Barclays]

So you're gonna see a bit more from there. So I think you've got a numerator and a denominator impact, Amit, which is which is why I'm not gonna be drawn on on the product margin specifically. Venkat?

[C.S. Venkatakrishnan, Group Chief Executive & Director at Barclays]

Yeah. Amit, when we announced our plan, six quarters ago, one of the things we said about the investment bank is that in markets, we had been doing a lot of investment in technology over the past few years, and that we would expect to see the benefits of that investment coming through in the in during the period of this plan. And that's what we're seeing. And then in banking, we said that we'd identified important segments of the market, including tech and health care, m and a, and also capabilities in the corporate and transaction bank, which we were investing in. We've been doing so, and I think we've seen the results of that.

[C.S. Venkatakrishnan, Group Chief Executive & Director at Barclays]

So expectations should be that we continue to operate according to the plan we laid out.

[Anna Cross, Group Finance Director at Barclays]

Okay. Thank you very much, Amit. Perhaps we can go to the next question please, operator, noting that that last question that is the last question of the call. Thank you.

[Operator]

Of course. Our final question today comes from Perley Mong from Bank of America. Please go ahead. Your line is now open.

[Perlie Mong, UK Banks Analyst at Bank of America Merrill Lynch]

Hi, Anna. Hi, Perley. Thank you for taking my question. Just a couple of quick ones. So The UK noted that very clearly, done 10,000,000,000 of organic RWA allocation to the business.

[Perlie Mong, UK Banks Analyst at Bank of America Merrill Lynch]

I guess there is a little bit of nervousness about a UK macro from here. Certainly, there are some nervousness around what the autumn budget might might have. So in the case that confident drops off and maybe activity comes down and you find it more difficult to allocate the remaining RWAs in The UK business, do you have a plan b? Like, would would you do acquisition to top it up and make sure you hit 30,000,000,000? And if that's the case, how would you think about that in the context of the 10,000,000,000 distribution?

[Perlie Mong, UK Banks Analyst at Bank of America Merrill Lynch]

So I guess that's number one. Number two, quickly touching on cost. So I think previously, you've said that you would expect cost to come down in 2027. I guess it looks like the efficiency savings are coming through as expected, all on track, and and if anything, the FX should be a little bit of help as well. So is that still what you would expect, that that 17 sort of maybe closer to 17,000,000,000 next year?

[Anna Cross, Group Finance Director at Barclays]

Okay. Thank thank you, Perle. So, you know, that we're pleased with the GBP 10,000,000,000 organic growth in The UK, and you can see from slide 13 that that momentum is picking up not just in The UK, in the areas that we've talked about before, which is, you know, cards and mortgages. We talk about a lot, but also in UK corporate. So we've had three successive quarters of of growth in UK corporate, and you can actually see b UK business banking now starting to turn.

[Anna Cross, Group Finance Director at Barclays]

And when we set our plan, we focused that plan on areas where we were either underweight or we felt we had opportunities to grow because we'd lost market share. So that's true of, for example, high loan to value mortgages or corporate and business banking where we have had a much higher loan to deposit ratio than our peers in the past. So we remain confident that we can deploy that, you know, noting that we're at a run rate of around 2,000,000,000 per quarter in 2025. You know, we're 17,000,000,000 at the halfway point. We've got six quarters to go.

[Anna Cross, Group Finance Director at Barclays]

You can do the math, particularly given that that momentum appears to be pick picking up. So it is and always has been an organic plan, and our capital hierarchy, as I said before, remains intact. Number one, regulation. Number two, at least 10,000,000,000. Number three, deploy capital into The UK.

[Anna Cross, Group Finance Director at Barclays]

So we're not gonna compromise on the quality or the returns of that lending in order to to meet a target. We're very disciplined. And then on the second question, actually, we said it was 2026 when costs would come down. That's still our plan. Our cost income ratio, guidance, for the full year, of this year is is 61%.

[Anna Cross, Group Finance Director at Barclays]

You can see that we've got a strong platform for that from the first half. Just note a couple of things. Firstly, income's a bit seasonal. And secondly, the fact that we did say that we would expect to skew our structural cost actions into the second half of the year. So we've done about a 100,000,000 so far.

[Anna Cross, Group Finance Director at Barclays]

Expect us to be at the top end of the 200 to 300,000,000. All of that is contained in the 61% guidance that we've given you for the cost income ratio. And you know, at this point, we're 1,350,000,000.00 through a 2,000,000,000, target. So we feel like we've got real momentum. Probably, so I wouldn't change how we feel about the 2026 cost position.

[Anna Cross, Group Finance Director at Barclays]

It's a really, really key part of the plan and delivering higher returns, more consistent returns. So, with that, we will close the call. I'd like to thank you for all of your questions today. We look forward to seeing, many of you either on the road over the next few days or indeed on the analyst call, next Monday. And if we don't see you, then have a good summer break when it comes. Thank you for that.

[C.S. Venkatakrishnan, Group Chief Executive & Director at Barclays]

Thank you.

[Operator]

Thank you. That concludes today's conference call. You may now disconnect.

Participants

Executives

• C.S. Venkatakrishnan, Group Chief Executive & Director
• Anna Cross, Group Finance Director

Analysts

• Alvaro Serrano Saenz de Tejada, Managing Director at Morgan Stanley
• Guy Stebbings, Executive Director - European Banks Research at BNP Paribas Exane
• Jason Napier, Head - European Banks Research at UBS Group
• Robert Noble, Banks Analyst at Deutsche Bank
• Christopher Cant, Head of Banks Strategy at Autonomous Research
• Jonathan Pierce, Equity Analyst at Jefferies
• Chris Hallam, MD & Head - European Financials Research at Goldman Sachs
• Andrew Coombs, Equity Research Analyst at Citigroup
• Amit Goel, Managing Director at Mediobanca
• Perlie Mong, UK Banks Analyst at Bank of America Merrill Lynch