Barclays profits beat forecasts on higher fees

(Sharecast News) - UK bank Barclays delivered a better than expected 17% jump in half-year profits driven by higher income in its global markets division and investment banking fees. Pre-tax profit for the six months to June 30 came in at £6bn, beating forecasts of £5.94bn, while group income increased 11% to £16.5bn boosted by higher structural hedge income and a one-off £225m gain from the sale of the American Airlines credit card portfolio. Barclays also announced a £1bn share buyback.

The bank said it remains on track to meet its 2026 and 2028 financial targets, upgrading its 2026 income goal to around £31.5bn. Net interest income excluding the investment bank and head office is now expected to exceed £13.7bn, reflecting continued balance‑sheet growth and hedge benefits.

Barclays announced £2.3bn of capital distributions for the first half, up 61% on last year. That includes a £1bn share buyback for Q2 and a 5.9p interim dividend, almost double the prior year's payout. Management reiterated its plan to return at least £10bn to shareholders between 2024 and 2026, with a preference for buybacks.

The group's CET1 ratio held at 14.3%, at the top of its 13-14% target range. After accounting for the new £1bn buyback, the ratio would be 14.0%, which Barclays said still provides comfortable headroom for regulatory changes and planned balance‑sheet growth.

Barclays UK delivered an 8% rise in income and a 20.1% RoTE, supported by loan growth and higher hedge income. Mortgage balances increased to £176.7bn, though margin compression and higher arrears nudged credit‑impairment charges up to £338m.

The UK Corporate Bank posted 30% profit growth, with income up 8% and RoTE rising to 20.6%. Higher average deposit and lending balances supported net interest income, while credit impairments remained low.

Private Bank and Wealth Management saw income rise 2% but profit fall 21% as investment spending pushed the cost:income ratio to 73%. Client assets increased to £230bn, helped by market movements and deposit inflows.

The Investment Bank delivered £7.99bn of income, up 11%, with strong performances in equities, advisory and ECM. Profit before tax rose to £3.34bn, though impairments increased due to a £228m single‑name charge. RoTE improved to 15.5%.

The US Consumer Bank benefited from the £225m gain on the AA portfolio sale and the Best Egg acquisition, lifting income 26% and RoTE to 24.2%. Underlying credit trends remained stable, with arrears broadly unchanged.

Looking ahead, Barclays expects to maintain a CET1 ratio within 13-14%, deliver a cost:income ratio in the high‑50s for 2026, and keep loan‑loss rates around the top of its 50-60bps through‑the‑cycle range. Management said it remains "confident" in meeting all financial and distribution targets for both 2026 and 2028.

Reporting by Frank Prenesti for Sharecast.com