Barclays PLC Earnings - Q4 2025 Analysis & Highlights
Barclays PLC reported strong full-year 2025 financial performance with achievement of all targets, improved capital generation, and strategic progress on digital assets and risk transfer capabilities, while providing guidance for continued returns growth through 2028 supported by structural hedge income and disciplined capital allocation.
Key Financial Results
Return on tangible equity (RoTE) of 11.3% achieved in 2025.
Top line income grew by 9% year-on-year to £29.1 billion.
Net interest income (NII) guidance for the group and Barclays UK was achieved.
Cost-to-income ratio improved year-on-year to 61%.
Group loan loss rate of 52 basis points, comfortably within the 50 to 60 basis points through-the-cycle guidance.
CET1 ratio ended the year at 14.3%, generating 173 basis points of capital from profits.
Capital generation of 173 basis points from profits in 2025.
Capital Allocation
£1 billion share buyback announced.
£800 million final dividend equivalent to £0.056 per share announced.
CET1 ratio adjusted for buyback is 14%.
£16 billion of MREL issued in 2025 with an MREL ratio of 35.8%.
£10 billion of MREL expected to be issued in 2026, with a skew towards senior reflecting limited requirements for AT1 and Tier 2.
Tier 1 ratio of 17.9%, maintaining healthy headroom above the 14.6% regulatory requirement.
AT1 component of 3.6% within the Tier 1 ratio.
Company is operating around the top of the 13% to 14% CET1 target range ahead of expected regulatory developments.
Business Segment Results
Retail and corporate businesses will materially drive income over the next three years.
International Corporate Bank demonstrated strong growth in US dollar offering and improved market share in UK Corporate Bank.
Retail deposits grew across UK businesses and in the US Consumer Bank.
Investment bank RWAs maintained broadly stable at around £200 billion.
Deposit base increased by £25 billion across customer segments.
Growth Opportunities and Strategies
Structural hedge will drive approximately 50% of total income growth over the next three years.
£20 billion of £30 billion planned business growth RWAs deployed over three years to 2026.
More than 5% loan growth annually expected to 2028.
Digital assets present significant opportunities, with Barclays developing tokenization of deposits and participating in sterling tokenised deposits (GBTD) pilot phase.
Risk transfer capabilities strengthened through execution of first UK consumer loan securitization in Q4.
Inorganic growth pursued through acquisitions like Kensington, Tesco, and Best Egg, which fit within strategy and deliver volume or capability.
Selective investments to support structurally higher returns beyond 2028, with capacity exceeding the level of investment set out in the plan.
Financial Guidance and Outlook
Group RoTE greater than 12% expected in 2026, building to more than 14% in 2028.
Modest cost growth expected, supported by planned efficiency savings and normalization of elevated cost base in 2025.
Positive jaws expected in every year of the plan, yielding a low 50s group cost-to-income ratio in 2028.
Group loan loss rate expected to remain around the through-the-cycle range of 50 to 60 basis points.
Investment bank RWAs as a percentage of the group expected to fall to approximately 50% by 2028, later than initial 2026 target due to postponement of regulatory changes.
Capital generation of more than 230 basis points expected in 2028, an improvement of more than 30% over the next three years.
£6.4 billion of gross structural hedge income already locked in for 2026 and £17 billion over the next three years.
Regulatory RWA inflation of between £19 billion and £26 billion expected, with approximately £16 billion from IRB migration in US Consumer Bank.
Basel 3.1 day one impact of £3 billion to £10 billion of RWAs expected.
Senior credit rating target remains for Barclays PLC senior to qualify as single A composite across all indices.
Liquidity and Funding
Average LCR of 170% represents £131 billion in excess of regulatory requirements.
Average net stable funding ratio of 135%.
Loan-to-deposit ratio of 73%, demonstrating robust liquidity position.
Structural hedges fully reinvested throughout 2025 at interest rates of approximately 3.8%, higher than the 3.5% assumption.
Gross structural hedge income increased to £1.2 billion to £5.9 billion, contributing 46% of 2025 group NII excluding investment bank and head office.
Average hedge duration increased to 3.5 years, reducing quantum of maturing hedges to approximately £35 billion per year from around £50 billion in recent years.
Regulatory Environment and Capital Requirements
Pillar 2A requirement expected to reduce following Basel 3.1 implementation and IRB migration.
FPC review welcomed for constructive tone around bank capital requirements, though reduced system-wide benchmark for Tier 1 capital does not affect current capital requirements or operating levels.
Company will continue engaging with Bank of England to promote international alignment and competitiveness.
Light capital redemption profile expected in 2026, including no AT1 calls.
Leverage framework identified as potential area for review by FPC, with company supporting dialogue on leverage as a front-stop measure.
Digital Assets and Innovation
Barclays playing a leading role in UK industry innovation in digital assets and well-positioned to bridge developments between US and UK.
Tokenization of deposits being developed to enable quicker and more straightforward transactions for clients.
GBTD pilot phase participation focused on connecting traditional and tokenized deposits and overlaying new functionality such as programmability.
Stablecoin value chain being explored with potential use cases for clients.
Joint investigation with other leading G-SIBs on potential benefits of jointly issuing a 1 to 1 reserve backed form of digital money.
Risk Management and Credit Quality
Risk transfer capabilities demonstrated through £54 billion of total notional SRT activity.
Colonnade program described as broadly at scale and mature, serving as primary risk management tool.
SRT activity in UK business focused on targeted risk management in areas of growth where risk is higher.
Private credit exposure managed with discipline, focused on top managers, valuation rights, larger businesses, and LTV management.
Risk concentration limits applied across industry and counterparty levels.
