- Another bumper quarter for the investment bank drives Barclays’ profits
- First-quarter earnings offer best three-month profit this decade from the bank
- This is despite higher loan losses and a provision against motor finance costs
- FTSE 100 member launches a new share buyback worth £500 million
- Only real disappointment is lack of growth in tangible net asset value (TNAV) per share
“Barclays’ shares are sliding toward the bottom of the FTSE 100 as investors shrug off a bumper quarter’s profits and a new share buyback programme and focus instead on higher loan losses,” says AJ Bell investment director Russ Mould.
“The higher provisions for bad loans stem mainly from the collapsed UK mortgage lender Market Financial Solutions (MFS) and failed American auto lender Tricolor. This again raises fears over whether lending standards have slipped but, more immediately, has held back tangible net asset value (TNAV) per share, which is a key valuation measure for the stock.
“Barclays took a £228 million hit from MFS and booked another £110 million loss against its exposure to Tricolor. As a result, total loan and asset impairment charges came to £823 million, the highest quarterly figure since the Covid-wracked April-to-June period of 2020.
Source: Company accounts
“Those losses, combined with a £105 million conduct costs provision to cover motor finance repayments, weighed on TNAV per share, which fell from 409p in December to 405p in March.
Source: Company accounts
“That drop means the shares look a little more expensive on a price-to-net asset, or book, value basis, all other things being equal, and the share price drop in early trading on Tuesday reflects this.
Source: Company accounts, Marketscreener, consensus analysts’ forecasts, LSEG Refinitiv data. *Price/book value based on historic TNAV per share for Q1 2026 for Barclays and Q4 2025 for HSBC, Lloyds, NatWest and Standard Chartered.
“Bulls of the stock will argue this still leaves TNAV near the high reached last quarter and that book value per share is more than capable of growing in the future, especially if Barclays can keep its nose clean on the regulatory front and demonstrate that MFS and Tricolor are blips and not the start of a troublesome trend.
“At least chief executive C.S. Venkatakrishnan can point to the best quarterly profit performance this decade, despite the loan and motor finance provision stumbles.
Source: Company accounts
“Another powerful showing from the investment bank underpins the strong three-month figures, with fixed income and equity trading and investment banking advisory services all performing strongly.
Source: Company accounts
“Wider market volatility has served Barclays’ investment bank well, just as it has the operations of its American rivals, and the prospect of an initial public offering bonanza is also a tempting one, should SpaceX, Anthropic and OpenAI come to market as expected in 2026.
“Equally, any unexpected market upset could take the steam out of the investment bank’s momentum and lead to a downturn in earnings. The operation’s inherently cyclical earnings stream, which can be very boom and bust, explains why Barclays’ shares trade on the lowest multiple of historic TNAV per share among the traditional Big Five FTSE 100 banks (who are now joined by a sixth, Lion Finance, after its promotion to the UK’s elite stock market index this spring).
“For the moment, however, the investment bank is performing strongly and that supports both profits and Barclays’ double-digit percentage return on tangible equity (RoTE). If that RoTE can be maintained then TNAV should grow and, in turn, provide support to Barclays’ share price, even after the stunning run of the last five years.
Source: Company accounts
“Management’s launch of a new £500 million share buyback suggests there is no shortage of confidence in the boardroom that the good times will continue to roll, even if the case for such a scheme is less compelling now the shares no longer trade below book value.
“Barclays’ has now declared buybacks worth £1.5 billion this year, and that adds to analysts’ dividend payment forecasts that equate to around £2.0 billion. That total cash return of £3.5 billion equates to just under 6% of the company’s total stock market capitalisation and forms part of the bank’s plan to return £15 billion in cash to shareholders via dividends and buybacks in the next three years.
Source: Company accounts, Marketscreener, analysts' consensus forecasts. *2026E buybacks as announced by management to date.
“Such a sum may catch the eye of income-seekers, and especially income funds, even if the stock’s valuation is no longer as cheap as it was, at least on the basis of TNAV per share.”
