Barclays Q3 Earnings Dip Y/Y as Costs, Credit Impairment Charges Rise

Barclays BCS reported third-quarter 2025 net income attributable to ordinary equity holders of £1.46 billion ($1.97 billion), down 6.8% from the prior-year quarter.

Results were hurt by an increase in expenses and higher credit impairment charges. However, an increase in revenues and a solid balance sheet supported the results.

Barclays’s Revenues Improve, Expenses Rise

Total income was £7.17 billion ($9.67 billion), up 9.5% year over year.

Operating expenses (excluding litigation and conduct costs) of £4.25 billion ($5.73 billion) increased 7.6% year over year.

The cost-to-income ratio was 63%, up from 61% in the year-ago period.

Barclays recorded credit impairment charges of £632 million ($852 million), surging 69% year over year.

Pre-tax income was £2.08 billion ($2.80 billion), up 6.9% from the prior-year quarter.

BCS’ Solid Balance Sheet

Total assets, as of Sept. 30, 2025, were £1,629.2 billion ($2,189.8 billion), up 7.3% from the Dec. 31, 2024, level.

Total risk-weighted assets fell marginally from the Dec. 31, 2024, level to £357.4 billion ($480.4 billion) as of Sept. 30, 2025.

As of Sept. 30, 2025, the Common Equity Tier 1 (CET1) ratio was 14.1% compared with 13.6% as of Dec. 31, 2024.

Update on Barclays’ Share Buyback Plan

Concurrent to the earnings release, the company announced its intention to bring forward a portion of its 2025 distribution plans, with a £500-million share buyback plan.

2025 Guidance

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

NII (excluding Barclays Investment Bank and Head Office) is expected to be more than £12.6 billion. Of this, Barclays UK is projected to generate NII of more than £7.6 billion.

The cost-to-income ratio is projected to be 61%, which includes £0.5 billion in gross efficiency savings.

The CET1 ratio is expected to be 13-14%.

Barclays expects to deliver a return on tangible equity (RoTE) of greater than 11%.

2026 Guidance

The company projects a total income of £30 billion.

Operating expenses are likely to be £17 billion, and the cost-to-income ratio is anticipated to be in the high 50s in percentage terms. This includes gross efficiency savings of £2 billion by 2026.

The loan loss rate is projected 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 12%.

Barclays Investment Bank RWAs are expected to be 50% of the Group RWAs. Further, the impact 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 plans to keep the total dividend stable at the 2023 level in absolute terms, with progressive dividend per share growth driven through share count reduction as a result of increased share buybacks.

This multi-year plan is subject to supervisory and board approvals, and an anticipated financial performance.

Our View on Barclays

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. Yet, uncertainties regarding the performance of capital markets businesses and a persistent rise in credit impairment charges are concerning.

Barclays PLC Price, Consensus and EPS Surprise

 

Barclays PLC price-consensus-eps-surprise-chart | Barclays PLC Quote

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 & Expected Earnings Release Date of Barclays’ Peers

ICICI Bank Ltd.’s IBN profit after tax for second-quarter fiscal 2026 (ended Sept. 30, 2025) was INR123.6 billion ($1.42 billion), up 5.2% from the prior-year quarter.

IBN’s results benefited from growth in net interest income and non-interest income, along with lower provisions. The loan balance increased sequentially, which was another tailwind. However, an increase in expenses was the undermining factor for ICICI Bank.

Deutsche Bank DB is expected to report quarterly results on Oct. 29.

The Zacks Consensus Estimate for DB’s quarterly earnings has been unchanged at 81 cents per share over the past week. The figure implies a decline of 9% from the prior-year quarter.

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

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