Barclays reported a 17% increase in first-half profit, beating market expectations as strong equities trading and higher dealmaking fees supported the British bank’s performance.
Despite the better-than-expected results, Barclays shares fell more than 4% during London trading. Investors appeared unconvinced by the headline figures and focused instead on rising costs and the possibility of slower growth during the second half of the year.
Barclays Profit Beats Analyst Forecasts
Barclays recorded profit before tax of £6.1 billion for the six months ending in June. Analysts had expected the bank to report approximately £5.94 billion.
The investment banking division remained one of the group’s main earnings drivers. It generated £4 billion in second-quarter income, exceeding the £3.7 billion forecast by analysts.
Equities trading revenue increased by 45% compared with the same quarter last year. However, Barclays’ growth remained below that of its major Wall Street competitors, which reported average gains of around 69%.
Bank Announces £1 Billion Share Buyback
Barclays also unveiled a new £1 billion share buyback programme. The announcement exceeded analyst expectations of approximately £831 million.
The bank slightly upgraded its full-year income forecast to £31.5 billion, compared with its previous guidance of £31 billion.
This larger-than-expected shareholder distribution highlighted management’s confidence in the bank’s capital position and future cash generation.
Operating Costs Increase
Group operating expenses rose due to business expansion, inflationary pressures and continued investment across the company.
However, Barclays said around £200 million in efficiency savings during the second quarter helped offset part of the increase.
Additional expenses may still emerge during the second half of the year, creating some uncertainty around the bank’s full-year cost performance.
U.S. Consumer Banking Income Rises 38%
Barclays’ U.S. Consumer Bank reported a 38% increase in quarterly income.
The division benefited from a gain of approximately £225 million related to the sale of Barclays’ American Airlines co-branded credit card portfolio. Its acquisition of Best Egg also contributed to the stronger performance.
These transactions helped offset weaker areas elsewhere in the group and provided an important boost to quarterly revenue.
Barclays Maintains Strong Capital Position
The bank’s return on tangible equity, also known as RoTE, reached 14.8% during the first half of the year.
Its Common Equity Tier 1 ratio stood at 14.3%, indicating that Barclays continues to maintain a solid capital buffer.
For the full 2026 financial year, management expects group RoTE to remain above 12%. Barclays also forecasts a CET1 ratio of between 13% and 14%.
The bank repeated its intention to return at least £10 billion in capital to shareholders between 2024 and 2026.
Management Remains Confident in Long-Term Targets
Barclays said it remains committed to achieving all its financial and shareholder distribution targets for 2026 and 2028.
The bank’s longer-term objectives include delivering a return on tangible equity above 14% by 2028.
Management believes the group is well positioned to meet those goals despite economic uncertainty, higher operating costs and changing market conditions.
Analysts Highlight Mixed Results
Jefferies analysts described Barclays’ report as a somewhat complicated set of results.
They noted that stronger-than-expected investment banking income was partly offset by weaker figures in other divisions. The analysts also warned that additional costs could emerge during the second half of the year and may not yet be fully included in current forecasts.
Nevertheless, Jefferies highlighted that shareholder distributions were significantly stronger than expected. The analysts also viewed Barclays’ confidence in its 2028 targets as an important positive, particularly because the bank continues to trade below its projected book value.
Morgan Stanley analysts expected a broadly neutral reaction from investors, although they said some shareholders could take profits following the results.
They added that the investment bank’s strong performance had already been largely anticipated by the market, limiting the potential for a further positive surprise.
Why Barclays Shares Fell Despite Higher Profit
Barclays delivered stronger profit, investment banking income and shareholder returns than analysts had predicted.
However, investors remained cautious because equities trading growth lagged major U.S. competitors, operating costs increased and much of the investment bank’s strength was already reflected in market expectations.
As a result, the impressive profit increase was not enough to prevent Barclays shares from declining following the announcement.
