Barclays Q4 Earnings Increase Y/Y, Credit Impairment Charges Decline

Barclays BCS reported fourth-quarter 2025 net income attributable to ordinary equity holders of £1.19 billion ($1.63 billion), up 23.8% from the prior-year quarter.

An increase in revenues and a strong balance sheet supported the results. A decrease in credit impairment charges was also encouraging. However, the company recorded higher operating expenses in the quarter.

Barclays’ Revenues Improve, Expenses Rise

Total income was £7.08 billion ($9.65 billion), up 1.6% year over year.

Operating expenses (excluding litigation and conduct costs) of £4.61 billion ($6.28 billion) increased 3.1% year over year.

The cost-to-income ratio was 66%, unchanged from the year-ago period.

Barclays recorded credit impairment charges of £535 million ($729.7 million), down 24.7% year over year.

Pre-tax income was £1.86 billion ($2.53 billion), up 11.9% from the prior-year quarter.

BCS’ Solid Balance Sheet

Total assets, as of Dec. 31, 2025, were £1,544.2 billion ($2,106.3 billion), up 1.7% from the Dec. 31, 2024, level.

Total risk-weighted assets fell marginally from the Dec. 31, 2024, level to £356.8 billion ($486.7 billion) as of Dec. 31, 2025.

As of Dec. 31, 2025, the Common Equity Tier 1 (CET1) ratio was 14.3% 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 initiate a further share buyback of up to £1 billion.

Barclays’ 2026 Guidance

The company now projects a total income of £31 billion compared with the prior projection of around £30 billion.

NII (excluding Barclays Investment Bank and Head Office) is expected to be more than £13.5 billion. Of this, Barclays U.K. is projected to generate NII in the range 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 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 now expected to be in the mid-50s percentage of Group RWAs, up from the prior expectation of around 50%. 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 also expects a progressive increase in total capital returns compared with 2025.

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

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 approximately £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

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. Although credit impairment charges decreased in the quarter, uncertainties around capital markets performance remain a concern.

Barclays PLC Price, Consensus and EPS Surprise

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

Currently, Barclays carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Barclays’ Peers

UBS Group AG UBS reported a fourth-quarter 2025 net profit attributable to shareholders of $1.19 billion compared with $770 million in the prior-year quarter.

UBS’ results were driven by the strong performances of the Global Wealth Management, Asset Management and Investment Bank divisions. However, the decline in total assets was concerning.

Deutsche Bank DB reported fourth-quarter 2025 earnings attributable to its shareholders of €1.29 billion ($1.55 billion), which rose significantly from €106 million ($126.8 million) reported in the prior-year quarter.

Increased revenues and lower provisions for credit losses aided DB’s results. Notably, the decline in expenses was encouraging.

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