Barclays PLC Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Financial Results: Income grew 14% year-on-year to GBP 7.2 billion, profit before taxes grew 28% to GBP 2.5 billion, earnings per share grew 41% to 11.7p. Return on tangible equity was 13.2% in the first half and 12.3% in Q2. Cost-to-income ratio was 59% in Q2, a 4 percentage point improvement year-on-year.
• Capital and Distributions: Announced a GBP 1 billion buyback, up from GBP 750 million in H1 2024, and a dividend per share of 3p. Total shareholder distributions for H1 2025 were GBP 1.4 billion, up 21% year-on-year.
• 3-Year Plan Progress: Midway through the 3-year plan, operational improvements across divisions are driving higher returns. Deployed GBP 17 billion of business growth risk-weighted assets into U.K. focused businesses since 2023, with GBP 10 billion from organic growth.
• Efficiency Savings: Achieved GBP 200 million of gross efficiency savings in Q2, with GBP 350 million for H1 2025, against a target of circa GBP 500 million for the year. All divisions had double-digit RoTE in Q2.

Segment Performance

• Investment Bank: Q2 RoTE was 12.2%, total income up 10% year-on-year. Markets income grew 34% year-on-year, financing income in U.S. dollars grew 23% year-on-year. RWAs were broadly flat.
• Barclays U.K.: Q2 RoTE was 19.7%, NII was GBP 1.9 billion, up 16% year-on-year. Cost growth was due to the acquisition and integration of Tesco Bank.
• U.K. Corporate Bank: Q2 RoTE was 16.6% (inclusive of a GBP 39 million litigation and conduct charge), NII up 21% year-on-year.
• Private Bank & Wealth Management: Q2 RoTE was 31.9%, net new assets under management were GBP 0.9 billion, with 8% year-on-year growth in client assets and liabilities.
• U.S. Consumer Bank: Q2 RoTE was 10.2%, up from 9.2% year-on-year, total income up 7% year-on-year in U.S. dollar terms, and NIM expanded to 10.8%.

Guidance

• Return on Tangible Equity: Expect circa 11% in 2025 and more than 12% in 2026.
• Share Buyback and Dividend: Initiated a GBP 1 billion share buyback and announced a dividend per share of 3p. Total shareholder distributions for H1 2025 were GBP 1.4 billion, with expectations of progressive increases.
• U.K. Business Deployment: On track to deploy GBP 30 billion of business growth risk-weighted assets in the U.K. by 2026, having achieved GBP 17 billion so far.
• NII Guidance: Barclays U.K. expects NII to exceed GBP 7.6 billion in 2025, with reinvestment of the structural hedge and lending momentum supporting this.

Risks

• No significant detailed risks explicitly discussed in the transcript. However, general risks such as regulatory changes, market volatility impacting business performance, and macroeconomic uncertainties could pose potential risks, though not extensively detailed in the provided transcript.

Q: On capital and the Investment Bank, how to balance distribution upside vs M&A firepower?

A: Angela Anna Cross stated the capital position reflects strategy execution, with priorities on regulation, distributions, and investing in U.K. businesses. Venkat noted the Investment Bank benefits from structural improvements and cyclical factors, expecting banking deal activity to pick up and markets to benefit from longer-term positioning.

Q: On Barclays U.K. historic swap maturity impact and U.S. consumer impairment?

A: Angela Anna Cross explained the historic swap maturity impact is accounting timing, not operational, and will support product margin in H2. On U.S. consumer impairment, Q2 showed seasonally lower impairments, with normal seasonal trends expected in H2 and a GBP 100 million day 1 charge in Q3 from General Motors acquisition.

Q: On retained targets for 2026 and market expectations?

A: Angela Anna Cross emphasized the strong platform with 13% RoTE at the end of H1, confident in momentum across businesses supporting 2026 and beyond targets. Venkat noted the strategy drives income momentum, cost control, and capital discipline, underpinning confidence in delivery.

Q: On promotional cards, U.K. deposits, and Kensington book?

A: Angela Anna Cross said promotional card balances maturing will support income in H2. U.K. deposits are following peer trends, with market share in current accounts maintained. Kensington book is growing, taking share in higher LTV mortgages with 4x higher application margins than comparable Barclays-branded mainstream mortgages.

Q: On RWAs in the Investment Bank and U.K. capital framework?

A: Angela Anna Cross stated IB RWAs have been broadly flat for 3.5 years, reflecting capital discipline. Venkat supported the importance of the ring-fencing regime for depositor protection and believes in the maintenance of the current structure, welcoming the U.K. capital framework review for a healthy banking system.