Barclays Q2 Earnings & Revenues Improve Y/Y, Cost Woes Linger

Barclays’ Revenues Improve, Expenses Rise

Total income was £8.34 billion ($11.19 billion), up 16% year over year.

Operating expenses (excluding litigation and conduct costs, and U.K. regulatory levies) of £4.51 billion ($6.05 billion) increased 9% year over year.

The cost-to-income ratio was 54%, down from 59% in the year-ago period.

Barclays recorded credit impairment charges of £571 million ($766 million), up 22% year over year.

Pre-tax income was £3.25 billion ($4.36 billion), up 31% from the prior-year quarter.

BCS’ Balance Sheet Solid

Total assets, as of June 30, 2026, were £1,730.4 billion ($2,291.4 billion), up 12% from the Dec. 31, 2025, level.

Total risk-weighted assets increased 2% from the Dec. 31, 2025, level to £364.8 billion ($483.1 billion) as of June 30, 2026.

As of June 30, 2026, the Common Equity Tier 1 (CET1) ratio was 14.3% compared with 14% as of June 30, 2025.

Barclays’ 2026 Guidance

The company projects total income of £31.5 billion.

NII (excluding Barclays Investment Bank and Head Office) is expected to be more than £13.7 billion. Of this, Barclays U.K. is projected to generate NII of £8.1-£8.3 billion.

The cost-to-income ratio is anticipated to be in the high-50s in percentage terms.

The loan loss rate is projected to be at the high end of 50-60 basis points through the cycle.

The CET1 ratio is expected to be 13-14%, and return on tangible equity (RoTE) is estimated to be more than 12%.

Barclays Investment Bank RWAs are expected to be in the mid-50s percentage of Group RWAs. The impacts of regulatory change on RWAs will be in line with the company’s prior guidance of £19-£26 billion.

In terms of capital returns, Barclays plans to return at least £10 billion between 2024 and 2026 through dividends and share buybacks, with a continued preference for buybacks. The company also expects a progressive increase in total capital returns compared with 2025, including planned £2 billion in dividends for 2026.

Barclays’ 2028 Guidance

The company expects total income to witness a compound annual growth rate (CAGR) of more than 5% between 2025 and 2028.

The cost-to-income ratio is anticipated to be in the low 50s in percentage terms. This includes gross efficiency savings of more than £2 billion during 2026-2028.

Management expects the loan loss rate to be 50-60 basis points through the cycle.

The CET1 ratio is expected to be 13-14%, and RoTE is estimated to be more than 14%.

Barclays Investment Bank RWAs are expected to be 50% of the Group RWAs.

In terms of capital returns, Barclays plans to return more than £15 billion of capital to its shareholders between 2026 and 2028 through dividends and share buybacks, providing capacity for additional investment and growth beyond the current plan.

Our View on Barclays

In June, BCS agreed to acquire GoHenry’s U.K. business from Acorns, which will strengthen its presence in youth banking.

In May, Barclays’ U.S. consumer banking arm, Barclays Bank Delaware, acquired Best Egg, a leading U.S. digital personal loan platform, for $800 million. The deal will strengthen its U.S. consumer finance capabilities and broaden its unsecured lending portfolio.

Given Barclays’ restructuring and business-simplification efforts, its operating efficiency is expected to improve in the quarters ahead. The company’s cost-saving efforts will likely keep aiding financials. However, uncertainties around capital markets performance remain concerning.

Currently, Barclays carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance & Earnings Release Date of Barclays’ Peers

ICICI Bank Ltd.’s IBN profit after tax for first-quarter fiscal 2027 (ended June 30, 2026) was INR148.05 billion ($1.56 billion), up 16% from the prior-year quarter.

IBN’s results were aided by growth in net interest income and non-interest income. A decline in provisions was a tailwind. However, higher operating expenses hurt the results to some extent.

UBS Group AG UBS is scheduled to report quarterly results on July 31.

The Zacks Consensus Estimate for UBS’ quarterly earnings has been unchanged at 90 cents per share over the past seven days. The figure implies a 25% rise from the prior-year quarter’s reported number.

Beyond Nvidia: AI's Second Wave Is Here

The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research