Barclays NYSE: BCS CFO Anna Cross said the bank continues to see resilient conditions among U.K. consumers and businesses, supporting loan growth across retail and corporate banking, while the company invests in technology, expands its U.S. consumer offering and works to reduce its structural cost base.
Speaking at a company event, Cross said the U.K. backdrop has remained supportive, citing nominal GDP growth above 4%, rising real wages and low unemployment. She said Barclays has seen quarter-on-quarter loan formation among both households and corporate customers, with corporate debt-to-GDP at an all-time low and businesses showing demand for financing related to productivity and technology investments.
Cross said potential changes to the U.K. bank surcharge would have a limited direct effect on Barclays’ returns. Each percentage point of the surcharge is worth roughly £35 million to the bank, she said, while the broader government signal around growth and investment is more consequential.
Loan Growth Driven by Distribution and Technology
Barclays reported 5% U.K. loan growth in the first half, including particular strength in corporate banking. Cross said the bank has not observed a pull-forward in demand and that Bank of England data for July supported the continuation of second-quarter trends.
She attributed growth partly to “self-help” initiatives, including a shift from a single-brand to a multi-brand retail business. In mortgages, Barclays’ Kensington capability has broadened the bank’s market reach, including higher loan-to-value lending. The share of high loan-to-value mortgages in its flow rose to 21% from about 13%, Cross said.
Technology investments have also supported mortgage market-share gains. Barclays’ flow share has exceeded its stock share in nine of the last 10 quarters, according to Cross. The bank is also using the Tesco, Avios and Amazon brands in its card offerings.
In U.K. corporate banking, Cross said Barclays has the largest level of corporate deposits among U.K. banks and remains positioned to serve companies ranging from small businesses to clients requiring investment-banking support. Its U.K. corporate loan-to-deposit ratio has risen to 35% from 31%, but remains below the 50% to 75% range Cross cited for many peers. She said the expansion has not changed the bank’s risk profile materially.
Deposit Competition and Premier Banking Focus
Cross described the U.K. deposit market as competitive, particularly in fixed-term deposits, though she said the environment is different from 2023. Rather than customers moving excess post-pandemic current-account balances into fixed products, Barclays is now seeing turnover of existing fixed-term deposits, she said.
Barclays expects U.K. net interest income of around £8.2 billion, the midpoint of its £8.1 billion to £8.3 billion guidance range. The company has forecast group net interest income above £13.7 billion.
The bank has focused its pricing on preserving customer relationships, Cross said. About 90% of Barclays’ retail deposits are held by customers who also have a current account. During the heightened individual savings account season, 85% of the bank’s deposit growth came from its Premier banking segment.
Cross said Barclays sees further opportunity among its 1.1 million mass-affluent retail customers, roughly half of whom are not currently in the Premier brand. The bank has launched a wealth proposition designed to provide a pathway from digital banking to wealth services, alongside changes including the removal of custody fees from its digital investing proposition.
Investment Bank and U.S. Consumer Expansion
Cross said Barclays’ investment bank generated a 15.5% return on tangible equity in the first half and that its mix of U.S.-based activity is comparable with U.S. peers, particularly in investment-banking fees. She said the division’s stable income base, including international corporate banking and financing, has grown to cover about 80% of its cost base, up from roughly 30% to 40% previously.
The bank has also been building its equities franchise, particularly equity derivatives, while maintaining its traditional strength in fixed income. Barclays participated in nine of the 10 largest initial public offerings during the second quarter, Cross said, though equity capital markets and mergers and acquisitions remain a relatively small portion of total investment-bank income.
In the U.S. Consumer Bank, Cross said Barclays is developing a broader digital consumer-bank model rather than operating solely as a card issuer. The business has added Best Egg and Samsung relationships after the offboarding of American Airlines. Samsung represents the first partner through which Barclays expects to offer cards, deposits and lending products together, she said.
Cross said the U.S. business has improved net interest margin by 2.5%, increased deposits by more than 15%, and reduced its cost-income ratio to the mid-40% range. Its cards business is growing organically at 8%, she said. Barclays does not currently see a material effect from higher U.S. rates on credit flows, although higher rates have pressured securitized sale prices for Best Egg loans.
Costs, Capital and AI
Barclays accelerated investments because income performance provided capacity to do so, Cross said, while maintaining its return and cost-income-ratio guidance. The bank plans to spend an additional £300 million this year on structural cost-reduction initiatives, on top of its typical £200 million to £300 million level of spending. About £250 million is expected in each of the third and fourth quarters, with half of third-quarter spending allocated to the U.K. business.
The initiatives are largely personnel-related and include organizational simplification and changes to compensation following U.K. regulatory reforms. Barclays continues to target a high-50s cost-income ratio this year and a low-50s ratio in 2028.
Cross said Barclays is progressing with technology modernization, with about 80% of its data now on an enterprise data platform and a target of 100% by the end of 2028. The bank has reduced contact-center workload by 6,000 hours through AI deployment and lowered inbound fraud calls by about 20%, she said.
On capital, Cross reiterated that Barclays’ plans are based on a 14% CET1 ratio. The bank expects further regulatory clarity in stages, including around Basel implementation and the planned migration of its U.S. Consumer Bank to an advanced internal-ratings-based model in the second half of 2027.
About Barclays (NYSE:BCS)
Barclays PLC NYSE: BCS is a diversified financial services company headquartered in London, United Kingdom. Founded in 1690, it has developed from a London-based banking business into an international group serving individuals, businesses, institutions and governments.
Barclays' principal activities include consumer and business banking, residential mortgages, savings and lending products, credit cards, payments, and wealth management. Through its investment banking operations, the company provides corporate finance, mergers and acquisitions advice, equity and debt underwriting, markets services, research, risk management and other advisory services to corporate, institutional and government clients.
The company serves customers primarily in the United Kingdom and the United States, while its corporate, investment banking and markets activities operate across major financial centers worldwide.
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