Barclays Q1 Earnings Call Highlights

Barclays NYSE: BCS reported first-quarter 2026 results that management said reflected the benefits of the strategy introduced in 2024 and “intensified” with longer-term targets laid out earlier this year. Group Chief Executive C.S. Venkatakrishnan told analysts the quarter showed “resilience through a period of elevated volatility” and reiterated confidence in meeting the bank’s 2026 and 2028 targets.

Quarterly performance and shareholder returns

Venkatakrishnan said the group delivered a return on tangible equity (ROTE) of 13.5% in the quarter, which he noted included “one-off impairments and charges.” Group income rose 6% year-over-year to £8.2 billion, while the cost-income ratio improved to 56%. He added that investment bank income “surpass[ed] £4 billion for the first time,” supported by modest growth in investment bank RWAs to facilitate cyclical activity.

Group Finance Director Anna Cross said profit before impairment increased 8%, with profit before tax up 3%. Earnings per share rose 8% to 14.1 pence, which she attributed in part to share count reduction. Barclays ended the quarter with a CET1 ratio of 14.1%, consistent with its intent to operate around the top of its 13% to 14% range.

Management reaffirmed plans to return at least £15 billion to shareholders by 2028. Venkatakrishnan said consistent capital generation supports that plan, “including today’s £500 million buyback announcement.” Cross added the £500 million buyback and a £500 million accrual toward the year’s planned £2 billion dividends were both “as planned.”

Net interest income and hedge positioning

Cross emphasized net interest income momentum, noting group NII (excluding the investment bank and head office) increased year-over-year for the eighth consecutive quarter and rose 12% from the prior year. She attributed the performance to stable deposits supporting structural hedge growth, continued lending momentum, and improvements in U.S. Consumer Bank funding, mix, and pricing.

Barclays maintained full-year guidance for group NII of more than £13.5 billion, including £8.1 billion to £8.3 billion in Barclays UK. Cross said the bank has now “locked in £18.3 billion of gross structural hedge income across 2026-2028,” up from £16.8 billion at the end of 2025, after increasing hedge notional by £6 billion versus the fourth quarter. New and maturing hedge assets were invested at around 3.9% in the quarter, above the approximately 3.5% planning assumption.

In Q&A, Cross told Morgan Stanley’s Alvaro Serrano that the first-quarter experience made the bank “more confident now on NII than we were at the full year,” citing deposit and lending performance and a slightly higher-than-guided U.S. Consumer Bank NIM of 12.8%. However, she said Barclays is still basing guidance on the 3.5% reinvestment rate and noted 95% of 2026 hedge income is already locked in.

Responding to Jefferies’ Jonathan Pierce, Cross said her comment that consensus appears “very light” for 2028 NII “doesn’t relate to the movement in the yield curve” and repeated that guidance remains anchored to the 3.5% reinvestment rate. She also stressed the hedge is rolled “systematically” and “mechanistically,” adding: “It is not our opportunity to speculate or determine what rates might be.”

Credit quality, impairments, and risk actions

Barclays reported a first-quarter group impairment charge of £823 million, equating to a 74 basis point loan loss rate. Both Venkatakrishnan and Cross highlighted a £228 million “single name charge” in the investment bank’s securitized products business that Venkatakrishnan said related to “a well-publicized sophisticated fraud.” He said the incident reinforced the importance of borrower financial controls and the difficulty of identifying fraud in advance.

As a result, Venkatakrishnan said Barclays is constraining lending to certain structured finance counterparties with “more vulnerable business models” that cannot demonstrate adequate, independent financial controls. He characterized the impact as not material to current income or foregone income and said those exposures are not a material portion of the book.

Separately, Venkatakrishnan said the bank is reducing exposure to “more highly leveraged non-investment grade corporates” given increased macro and business uncertainty. Cross said that due to the single-name charge, Barclays now expects a group loan loss rate “around the top of the 50-60 basis point through the cycle guidance in 2026.”

Management said it does not currently see credit weakness in the U.K., in the U.S. Consumer Bank, or in corporate lending. Cross described U.K. and U.S. consumer and corporate balance sheets as “robust,” with low and stable delinquencies and rational borrower behavior, while acknowledging IFRS 9 models are procyclical and sensitive to changing economic expectations.

Division highlights: UK, investment bank, and U.S. Consumer Bank

Cross said all divisions generated double-digit returns. She cited ROTE of 19.7% in Barclays UK and 19.9% in the UK Corporate Bank, alongside 25.5% ROTE in Private Bank and Wealth Management. Barclays UK net interest income rose 9% year-over-year to £2.0 billion, while UK lending grew 5% year-over-year. The bank added 364,000 new U.K. card customers and grew card balances 8% year-over-year.

The UK Corporate Bank saw income rise 10% and costs fall 2%, improving its cost-to-income ratio to 48%. Cross also highlighted that all UK corporate banking clients are now enabled on iPortal, a single platform replacing five prior systems, with full migration expected during 2026.

In the investment bank, Cross said the division delivered its eighth consecutive quarter of year-over-year income growth, RWA productivity improvements, and positive operating jaws. Investment bank ROTCE was 15% in Q1, with performance affected by the £228 million impairment charge and fair value moves in corporate lending. In U.S. dollar terms, markets income rose 13%, with equities up 23% and FIC up 8%. Financing income increased 31% for the seventh consecutive quarter, while investment banking fees rose 25%, including 89% advisory fee growth and 38% ECM fee growth. Cross said Barclays took leading positions in three of the four largest global deals in Q1 and reported a “solid IPO pipeline” for the rest of the year.

In the U.S. Consumer Bank, Cross said receivables grew 9% year-over-year, supported by the addition of the General Motors portfolio. ROTCE improved to 18.8%, aided by deposit gathering and a full quarter of American Airlines portfolio income without associated marketing costs. She said retail deposit balances increased 8% quarter-over-quarter and are up 52% since the end of 2023, with retail deposits now 76% of overall funding—above the 75% target for end-2026.

Looking ahead, Cross said the completed exit of the American Airlines portfolio on April 24 is expected to lift NIM to more than 13% for full-year 2026, “approaching 14% in half two,” while the 2026 loan loss rate is still expected to be around 550 basis points. She added Q2 income will include an approximately $300 million gain on sale, below prior guidance of about $400 million due to lower balances at the point of sale. The bank also expects incremental monthly costs of about $45 million from Best Egg, which it expects to complete in early May.

Capital, leverage, and regulatory topics

On capital and regulation, Cross told Citigroup’s Andrew Coombs that Barclays is “not leverage constrained,” while acknowledging significant leverage usage in the investment bank’s financing business and noting the bank is a meaningful AT1 issuer. She also referenced Barclays’ published work on the potential treatment of unencumbered gilts in the U.K. leverage ratio, describing it as a broader opportunity for the U.K. that could reduce government costs.

Venkatakrishnan said Barclays is monitoring developments in the U.S. around the Basel III endgame, supervision, and stress testing and advocated for greater consistency and transparency. He also said the Best Egg acquisition should be viewed as part of diversifying the U.S. Consumer Bank beyond credit cards into areas “less penalized in terms of capital.”

On media questions about significant risk transfer (SRT) governance inquiries, Cross said she would not comment on regulatory reviews but noted the PRA regularly conducts thematic and firm-specific work across the industry. She said Barclays’ Colonnade program has been in place since 2016, is cash-collateralized, and Barclays does not finance its own SRTs. Cross added the bank limits maturities in any quarter to less than £2 billion and does not “envisage any changes” to the program.

In closing remarks, Venkatakrishnan said the bank’s operating improvements continued into the first quarter and that diversification across businesses helps Barclays navigate volatility. “We are reiterating all our targets,” he said, pointing to the 14.1% CET1 ratio, momentum in NII, and improving returns across the investment bank and U.S. Consumer Bank.

About Barclays NYSE: BCS

Barclays PLC NYSE: BCS is a British multinational bank and financial services company headquartered in London. The firm provides a broad range of banking and financial products to individual, corporate and institutional customers. Its core activities span retail and business banking, credit cards and payments, corporate and investment banking, and wealth and investment management.

In retail and business banking, Barclays offers deposit accounts, mortgages, personal and business loans, and card services.

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