Barclays quarterly profit beats hopes but higher costs peg back shares

Barclays PLC on Tuesday raised full-year net income guidance after a strong second quarter led by its investment banking division, but higher costs and a mixed divisional performance saw shares fall.

The London-based financial services company said pretax profit leapt 31% to £3.25 billion in the quarter ended June 30 from £2.48 billion the year prior, with total income surging 16% to £8.34 billion from £7.19 billion.

Total income beat company-compiled consensus of £8.12 billion, with pretax profit beating a forecast of £3.12 billion.

For the whole of the half-year, total income is 11% higher at £16.50 billion, with pretax profit up 17% to £6.07 billion.

"I am pleased with another strong quarter for Barclays," Chief Executive CS Venkatakrishnan said.

Return on tangible equity improved to 16.1% in the quarter from 12.3% a year ago, with all divisions delivering double-digit growth.

By division, pretax profit rose 32% at Barclays Investment Bank to £1.72 billion, beating £1.56 billion consensus, driven by Global Markets and Investment Banking fees. In particular, Equities revenue jumped 45% on-year, although analysts noted this was still below US peers who reported equities growth of 68%.

But Barclays UK pretax profit was 3% shy consensus, while Barclays Private Bank and Wealth Management was 5% short of consensus and Barclays US Consumer Bank 7% below.

Operating costs increased 8.7% to £4.51 billion in the quarter from £4.15 billion a year ago, ahead of £4.36 billion consensus, reflecting business growth, inflation and further investment spend, partially offset by £200 million of cost efficiency savings.

In addition, analysts noted Barclays said it expects £450 million of incremental costs in the second half of 2026, including up to £300 million structural cost actions and up to £150 million for changes to investment banking compensation.

Shares in Barclays fell 4.2% to 508.20 pence each in London on Tuesday morning, the biggest faller on the FTSE 100, which was up 0.1%.

Barclays upped its dividend to 5.9 pence per share from 3.0p, and it announced a new £1.0 billion buyback.

It still targets returning £10 billion to shareholders between 2024 and 2026, "through dividends and share buybacks, with a continued preference for buybacks".

This year will see a "progressive increase in total capital returns versus 2025".

Looking to 2026 as a whole, Barclays now expects total income of around £31.5 billion, ahead of a prior forecast of around £31 billion. Total income in 2025 amounted to £29.14 billion.

Barclays UK NII is projected around the middle of the £8.1 billion to £8.3 billion guided range.

In addition, the bank expects a group cost: income ratio of high 50s in percentage terms.

The CEO said Barclays remains "committed to, and confident in, delivering all financial and distribution targets for 2026 and 2028."

It plans to return greater than £15 billion of capital to shareholders between 2026 and 2028, through dividends and share buybacks.

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