One Churchill Place skyscraper, the Barclays Plc headquarters, at Canary Wharf in London, U.K., on Thursday, Jan. 7, 2021.
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British lender Barclays increased its guidance and announced a £500 million ($667 million) share buyback in its third-quarter earnings on Wednesday.
The bank said it now expected to deliver RoTE (Return on Tangible Equity) of greater than 11%, up from around 11%, for the full year. Net interest income (excluding investment banking and head office) guidance was also upgraded to more than £12.6 billion for the year, up from over £12.5 billion.
“We have been robustly and consistently generating capital for our shareholders consecutively over the last nine quarters,” CEO C. S. Venkatakrishnan said in a statement.
“Consequently, we have decided to bring forward a portion of our full-year distribution plans, with a £500m share buyback announced today and we now plan to move to quarterly share buyback announcements. Our consistent and strong delivery has laid the foundations for greater performance beyond 2026, and I look forward to sharing updated targets to 2028 alongside our FY25 Results.”
It comes despite pre-tax profit for the third quarter coming in at £2.1 billion, slightly below analysts’ expectations and marking a 7% decline from the same period in 2024.
London-listed shares of Barclays were trading 3.4% higher in early trade on Wednesday.
Barclays share price
Income, which came in at £7.2 billion for the quarter, took a hit from a £235 million charge related to the U.K.’s car loans scandal. It brings Barclays’ total charges related to the incident — which officials say saw millions of consumers unfairly sold vehicle finance — up to £325 million. Barclays also said it had incurred a £110 million impairment charge from a “single name” claimant.
Return on Tangible Equity for the quarter hit 10.6%, down from 12.3% a year earlier, while earnings per share came in at 10.4 pence.
Income in the investment banking division increased by 8% year-on-year.
Strong investment banking returns have helped propel European financial stocks upward this year, with the Stoxx 600 Banks Index gaining more than 55% over the course of 2025 so far. Barclays shares have surged over 35% year-to-date.
Across the Atlantic, industry heavyweights JPMorgan Chase and Goldman Sachs also reported stronger-than-expected third-quarter earnings last week, with both companies’ results bolstered by earnings beats in their investment banking units.
The sector has been in the spotlight stateside after fears mounted over the possibility of bad loans on Wall Street. The jitters reached European banking stocks on Friday, although shares quickly recovered amid confidence that there is no systemic issue.
Barclays has a significant presence in the U.S., including in investment banking thanks to its 2008 acquisition of Lehman Brothers’ investment banking and capital markets units.
‘Unknown unknowns’
In a Wednesday morning note, RBC Capital Markets Analyst Benjamin Toms pointed out that without litigation charges, Barclays would have posted a 6% beat on pre-tax profit. He argued that based on analysis of forward tangible book value and RoTE, the company’s shares should be trading at a higher multiple — but conceded that the banking sector was fraught with challenges, including uncertainty surrounding the U.K.’s looming Autumn Budget.
“The bank’s U.S. corporate exposure will receive scrutiny given local trends over the last couple of months,” he added. “[And] some of the biggest risks to our investment thesis are conduct and litigation costs and ‘unknown unknowns.'”