Barclays Q2 Earnings Call Highlights

Key Points

• Barclays reported strong Q2 results, with income rising to £8.3 billion, profit before tax up more than 30% to £3.3 billion, and quarterly RoTE reaching 16.1%. The bank raised its 2026 income target to approximately £31.5 billion.
• The bank announced £1 billion in share buybacks and an £800 million interim dividend, bringing first-half distributions to £2.3 billion. Its pro forma CET1 ratio would be 14%, near the top of its target range.
• Barclays is accelerating efficiency efforts, delivering £350 million in first-half savings and planning up to £500 million of additional structural cost actions. U.K. businesses generated returns above 20%, while strong Investment Bank performance offset pressure in the U.S. Consumer Bank.

Barclays NYSE: BCS reported higher second-quarter income and profit before tax, raised its 2026 income outlook and announced increased shareholder distributions as it continues to pursue higher returns and operating efficiency.

The bank said second-quarter income rose £1.2 billion from a year earlier to £8.3 billion, while profit before tax increased more than 30% to £3.3 billion. Return on tangible equity, or RoTE, was 16.1% in the quarter and 14.8% for the first half. Earnings per share rose 43% year over year to £0.167, supported by a 36% increase in attributable profit and a lower share count following buybacks.

Barclays increased its 2026 group income target to about £31.5 billion from prior guidance of about £31 billion. The bank reiterated its expectation for RoTE above 12% in 2026 and said planned investments and cost actions increased its confidence in reaching RoTE above 14% in 2028.

Shareholder returns and capital

The company announced a £1 billion share buyback and an £800 million interim dividend, equivalent to £0.059 per share. First-half distributions totaled £2.3 billion, up 61% from the first half of 2025. Barclays said it has announced £9 billion in distributions since 2024 and remains on track to exceed £10 billion by the end of 2026.

Its CET1 capital ratio stood at 14.3% at the end of the quarter. Pro forma for the buyback, the ratio would be 14%, which Barclays said is consistent with its intention to operate near the top of its 13% to 14% target range, pending regulatory clarity.

The bank reported group risk-weighted assets of £365 billion, broadly unchanged from the prior quarter. It maintained guidance for £19 billion to £26 billion of regulatory risk-weighted-asset inflation in 2027, including Basel 3.1 changes and implementation of internal ratings-based models in the U.S. Consumer Bank.

Costs and income outlook

Anna said Barclays delivered £350 million of gross efficiency savings in the first half, including £200 million in the second quarter. The group cost-to-income ratio improved to 54% from 59% a year earlier, though total costs rose about £300 million, reflecting growth investments and higher compensation accruals in the Investment Bank.

The bank expects to take additional structural cost actions in the second half, with up to £500 million anticipated after recognizing about £100 million so far this year. Management said those actions are expected to generate a return on investment of about 100% within 12 months and create a commensurate improvement in gross efficiency savings in 2027.

Anna said Barclays is not providing an absolute cost target for 2027, instead emphasizing cost-to-income ratios and returns. The bank expects a high-50s group cost-to-income ratio in 2026 and said 2027 should represent a meaningful step toward its low-50s target for 2028.

Group net interest income, excluding the Investment Bank and head office, rose 10% year over year. Barclays now expects group net interest income above £13.7 billion in 2026. The structural hedge accounted for about 45% of second-quarter group net interest income, and management said it should generate around half of planned group income growth between 2025 and 2028.

U.K. businesses post returns above 20%

All three U.K. businesses reported RoTE above 20% in the quarter. Barclays UK delivered a 20.4% return on capital employed, with income up 7% and costs flat. Net interest income increased 8% to £2 billion, while lending grew 5% year over year and deposits increased £1.7 billion in the quarter.

Management said U.K. deposit competition was elevated during the ISA season, which was 7% larger than the previous year. However, Anna said Barclays expects sequential growth in Barclays UK net interest income in the third and fourth quarters, supported by card seasonality, day-count effects, mortgage-margin improvement and a more favorable term-deposit repricing dynamic.

UK Corporate Bank posted a 21.3% RoTE, as income increased 8% and net interest income rose 15%. Loans grew 12% and deposits rose 4%. Barclays said U.K. corporate lending increased 12% year over year, continuing a period in which it has grown faster than the broader U.K. market.

Private Bank and Wealth Management generated a 26.9% RoTE. Assets under management rose 15% year over year, aided by valuation effects, while income increased 5%. The bank expects a mid-70s cost-to-income ratio in the unit during 2026 as it invests in marketing, staffing and its recently launched Planning and Advice offering.

Barclays also highlighted the removal of custody charges for customers of Barclays Direct Investing and the planned acquisition of GoHenry, expected to close in the fourth quarter.

Investment Bank and U.S. Consumer Bank developments

The Investment Bank reported a 16% RoTE, up 3.8 percentage points year over year. Markets income increased 17% in U.S. dollar terms, with equities income up 44%, driven by equity derivatives and prime financing. Investment-banking fees rose 30%, including a 51% increase in advisory fees and a 91% increase in equity capital markets income.

Venkat said Barclays is working to diversify the Investment Bank toward more stable financing and international corporate banking revenue, while expanding equities relative to fixed income. Equities represented 32% of markets income in the quarter, compared with 22% in 2023.

The U.S. Consumer Bank reported 10.5% return on tangible common equity excluding a $225 million gain from the American Airlines portfolio sale. The unit completed its acquisition of Best Egg in May, adding about $11 billion of managed balances, and announced a partnership to provide card products in Samsung Wallet in the United States.

Barclays said U.S. Consumer Bank net interest margin was 13.2% and it still expects margin above 13% for 2026. Higher benchmark rates have pressured pricing for originate-to-sell loans, however, and management said quarterly income may not return to the first-quarter level during 2026 despite volume momentum.

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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