Third-quarter total income rose 3% to £7.4bn (£7.6bn expected), driven by higher interest income across its UK businesses.
Profit before tax rose 12% to £2.3bn (£2.4bn expected), as lower impairment charges helped offset higher operating costs, including £201mn of restructuring charges.
Credit impairment charges fell 20% to £503mn (£586mn expected), reflecting more normal charge levels in the Investment Bank and US Consumer Bank.
Capital levels remained strong, with the CET1 ratio at 14.2% (14.3% expected), or 14.0% including the new £500mn buyback announced today (£579mn expected).
Guidance for 2026 was unchanged, with total income still expected to reach around £31.5bn (£31.5bn expected). Total costs are expected to be around £18.5bn this year and £18.4bn in 2027.
The shares were broadly flat in early trading.
Our view
Barclays’ third quarter was a reminder that progress rarely comes in a straight line. Steady UK lending growth and lower bad debt charges helped, but a weaker Investment Bank left top-line income short of expectations. Full-year targets remain intact, while clearer cost plans and another buyback give investors something to hold onto.
There are a few moving parts to operations, but looking at more traditional interest income streams, the environment remains supportive. The UK arm generates over half of all interest income, so improving trends at home have been helpful.
The shift from savers to longer-term and less profitable accounts remains a modest headwind, while mortgage margins are still under some pressure. But lending is growing, and the structural hedge continues to underpin top-line growth. Interest income guidance is unchanged, though we think these benefits are now better understood, limiting the scope for major surprises.
But Barclays is also one of the largest global investment banks and has a sizeable US credit card business. The latter remains higher risk, and returns haven’t been as strong as other parts of the business. Still, credit performance remains reassuring, while portfolio changes and repricing are supporting interest margins. But higher US rates could temper further progress.
The large Investment Bank is one of Barclays’ key differentiators and a driving force behind its medium-term targets. This quarter was more mixed, with strong equities trading unable to offset a weaker-than-expected performance in fixed income, currencies and commodities. Diverse income streams are a benefit when economic conditions are uncertain, but consistent delivery remains the challenge.
Cost discipline is another important part of the story. Restructuring spending is weighing on this year’s results, but plans to reduce total costs slightly in 2027 give more substance to the efficiency drive. Delivering those savings while continuing to invest will be key.
The balance sheet is well capitalised, with another £500mn buyback taking the capital ratio to the top of the target range. Lower regulatory capital requirements from January should provide greater flexibility. Barclays’ plan to return more than £15bn over 2026-28 looks pretty comfortable, though not guaranteed.
There are reasons to be optimistic after a weak spell for the sector heading into results, with attractive capital return plans offering support. But the revamped Investment Bank still needs to prove it can deliver consistently across different conditions. With few obvious near-term catalysts, we see a more balanced investment case rather than a compelling reason to turn more positive.
Environmental, social, and governance (ESG) risk
The financials sector is medium-risk in terms of ESG. Product governance is the largest risk for most companies, especially those in the US and Europe with enhanced regulatory scrutiny. Data privacy and security is also an increasingly important risk for banks and diversified financial firms. Business ethics, ESG integration, and labour relations are also worth monitoring.
According to Sustainalytics, Barclays’ overall management of material ESG issues is strong.
Despite strong policies overall, Barclays has some room for improvement regarding customer data privacy and environmental commitments. Investigations are also ongoing into alleged currency manipulation, and its data security could be strengthened with more frequent risk assessments and external audits. The quality of its environmental policy has deteriorated, with limited commitments to reducing emissions.
Barclays key facts
All ratios are sourced from LSEG Datastream, based on previous day’s closing values. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn’t be looked at on their own – it’s important to understand the big picture.
This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by LSEG. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment.