Barclays NYSE: BCS reported third-quarter income of £7.4 billion, up 3% from a year earlier, while profit before tax rose 12% to £2.3 billion. The bank said its return on tangible equity, or RoTE, was 11.7% for the quarter and 13.8% year-to-date, supporting a new £500 million share buyback.
Group Chief Executive C.S. Venkatakrishnan said the additional repurchase brings year-to-date shareholder distributions to £2.8 billion, a 47% increase from the same period a year ago. Barclays said it remains confident of delivering a group RoTE above 12% in 2026, having produced 12.4% over the past 12 months.
The bank’s cost-income ratio improved to 62% in the third quarter and 57% year-to-date. Earnings per share increased 18% year-over-year in the quarter, and Barclays said it remains on track for a third consecutive year of 20% earnings-per-share growth.
Income growth supported by U.K. lending and deposits
Group Finance Director Anna Cross said third-quarter income growth kept Barclays on track for its approximately £31.5 billion income target for 2026. The target would represent roughly 8% growth from 2025, ahead of the bank’s target of more than 5% compound annual revenue growth through 2028.
Net interest income rose 7% year-over-year in the third quarter. Cross said the bank expects continued growth from its structural hedge and lending momentum. Average swap rates of 4.2% year-to-date exceeded Barclays’ 3.5% planning assumption, and the bank said hedge income is likely to increase through at least 2030 under prevailing and expected swap rates.
Total U.K. lending grew 7% from a year earlier. Mortgage balances increased 7%, supported by £11 billion in gross lending during the quarter, while corporate and business banking lending rose 13%, excluding the run-off portfolio. Barclays said it has deployed £28 billion of U.K. business-growth risk-weighted assets toward its approximately £30 billion three-year target through 2026.
In Barclays UK, third-quarter RoTE was 21.2%, while income increased 4% and net interest income rose 6% to £2.1 billion. U.K. Corporate Bank reported a 23.5% quarterly RoTE, with income and costs each rising 10%. Lending in that division grew 14%, while its loan-to-deposit ratio reached 38%.
Private Bank and Wealth Management produced a 23.8% quarterly RoTE. Assets under management increased 10% year-over-year, including £2.5 billion in year-to-date net new assets under management.
Cost program targets £18.4 billion in 2027 statutory costs
Barclays provided additional detail on its efficiency plans, distinguishing between costs to run the bank and strategic investments intended to increase future returns. Cross said the bank expects 2026 exit-rate costs of about £18 billion, while statutory costs are expected to be approximately £18.5 billion for the full year, including motor finance provisions, changes to material risk-taker compensation and planned second-half restructuring spending.
For 2027, Barclays expects statutory costs to decline to about £18.4 billion. Run-the-bank costs are expected to be flat or lower compared with 2026, creating capacity for £400 million of additional planned investment.
The bank expects more than £1.1 billion of gross efficiency savings in 2027, compared with around £700 million annually over the past two years. Those actions are expected to reduce the workforce by about 5,000 full-time employees, with roughly 60% of the measures affecting support functions.
- Barclays UK call-center volumes declined 10% over the past year after customer-facing technology improvements.
- Employees per branch fell about 10% as the bank adjusted its branch staffing model.
- Integration of Tesco Bank is expected to generate around £200 million of cost synergies, largely split between 2027 and 2028.
Cross said Barclays UK’s cost-income ratio is expected to be in the high 40s in 2027 before declining to the mid-40s in 2028. At the group level, Barclays reiterated its expectation of a low-50s cost-income ratio by 2028.
Equities offset weaker fixed-income intermediation
The Investment Bank generated a 9.5% RoTE in the third quarter, with income broadly unchanged from a year earlier. In U.S. dollar terms, markets income increased 4%, as a 47% increase in equities revenue offset weaker fixed-income, currency and commodities intermediation.
Equities represented half of third-quarter markets income, aided by strong equity derivatives activity and growth in prime financing. Investment banking fees rose 2%, as advisory and equity capital markets activity offset lower debt capital markets fees.
Venkatakrishnan described fixed-income intermediation as “somewhat disappointing,” citing lower client activity in European rates and parts of credit during the latter part of the quarter. He said there were no particular marks or trading positions to call out and maintained that the fixed-income franchise remained strong.
Barclays said it has increased income relative to average Investment Bank risk-weighted assets by 130 basis points since 2023, reaching 6.8% over the past 12 months. The bank has kept Investment Bank risk-weighted assets broadly within a £195 billion to £205 billion range since 2022.
Capital flexibility and U.S. consumer banking
Barclays ended the quarter with a 14.2% common equity tier 1 ratio. The bank said expected Basel 3.1 implementation will add £8 billion to £15 billion of risk-weighted assets, equivalent to 30 to 55 basis points of CET1 capital. However, greater clarity on Pillar 2A requirements is expected to reduce its maximum distributable amount threshold by 59 basis points, more than offsetting the Basel impact.
Cross said Barclays will provide an update on its CET1 operating level within the 13% to 14% range when it reports full-year results. She added that the bank expects to maintain an appropriate buffer above its maximum distributable amount threshold.
In the U.S. Consumer Bank, quarterly RoTE was 10.9% and income rose 1%. Net interest income increased 3%, while costs rose 14%, reflecting a full quarter of Best Egg expenses. Barclays reiterated its expectation for about 12% RoTE in the division for 2026, excluding the gain from the American Airlines portfolio sale.
Venkatakrishnan said Barclays is entering the next phase of its strategy with a focus on lower unit costs through data standardization, infrastructure modernization, process harmonization and broader use of artificial intelligence. “AI is the icing on the cake, not the cake,” he said, emphasizing that the technology efforts depend on underlying investments in systems and processes.
About Barclays (NYSE:BCS)
Barclays PLC is a diversified financial services company headquartered in London, England. Through its banking and financial services businesses, the company serves individuals, businesses, institutions and governments in the United Kingdom, the United States and other international markets.
Its principal activities include consumer and business banking, current and savings accounts, mortgages, personal loans, credit cards and payment services. Barclays also provides private banking and wealth management services, including investment management, financial planning and lending for high-net-worth clients.
Through its corporate and investment banking operations, Barclays offers corporate lending, transaction banking, financial advice, securities underwriting, sales and trading, research and capital-markets services.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
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