Barclays PLC Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Top line income increased 11% to GBP 7.2 billion in Q3 compared to the same quarter last year.
• Tangible net asset value per share (TNAV) rose to 392p. 2025 return on tangible equity (RoTE) was upgraded to greater than 11%, and the 2026 target of more than 12% was reaffirmed.
• Group NII for 2025 is expected to be more than GBP 12.6 billion, up from over GBP 12.5 billion, supported by U.K. lending momentum and operational progress in the U.S. Consumer Bank.
• A GBP 500 million share buyback was announced, to commence after the current buyback is completed, with quarterly buybacks subject to regulatory and board approvals.
• Circa GBP 500 million of gross efficiency savings were achieved in 2025, 1 quarter earlier than planned, with a target of circa GBP 2 billion gross efficiency by the end of 2026 (GBP 1.5 billion already achieved).
• All divisions achieved double-digit RoTE in Q3, including the investment bank (10.1%) and U.S. consumer bank (13.5%).
• U.K. lending momentum continued: mortgages had net lending of GBP 3.1 billion in Q3, the highest since 2021; the U.K. Corporate Bank saw lending grow 17% year-on-year.
• The structural hedge is expected to drive multiyear NII growth beyond 2026, with a yield on maturing hedges in 2027 around 2.1%.

Segment Performance

• U.K. Consumer Bank: U.K. lending momentum supported group net interest income (NII). In mortgages, net lending in Q3 was GBP 3.1 billion, the highest since 2021, with 5 consecutive quarters of balance growth. The U.K. Corporate Bank saw lending grow 17% year-on-year for the fourth consecutive quarter, increasing market share to 9.3%.
• U.S. Consumer Bank: Net receivables grew 10% year-on-year, NIM rose to 11.5%, and RoTE was 13.5%, up 2.6% year-on-year. Net interest income grew 14% year-on-year and 12% quarter-on-quarter.
• Investment Bank: RoTE was 10.1%, with stable income streams in Markets and International Corporate Bank accounting for nearly half of income. Year-to-date RoTE was 12.9%.
• Private Bank and Wealth Management: Q3 RoTE was 26.4%, with client assets and liabilities growing 10% year-on-year and assets under management up 12%.
• U.K. Corporate Bank: Lending grew 17% year-on-year for the fourth consecutive quarter, with market share increasing to 9.3% and deposit market share exceeding 20%.

Guidance

• Upgraded 2025 RoTE guidance to greater than 11% and reaffirmed the 2026 target of more than 12%.
• Group NII for 2025 is expected to be more than GBP 12.6 billion, up from over GBP 12.5 billion.
• A GBP 500 million share buyback announced, with quarterly buybacks subject to regulatory and board approvals.
• Reiterated the guidance to return at least GBP 10 billion of capital over the 3-year plan, with a progressive increase in total payout for 2025 versus 2024.
• Expect the cost-to-income ratio for 2025 to be circa 61% despite the motor finance provision.
• Group loan loss rate was 57 basis points in Q3, within the planning range.

Risks

• Motor finance provision due to the FCA's proposed industry-wide redress scheme, increasing the likelihood of more cases eligible for redress.
• Single name charge in the investment bank.
• Risks associated with private credit, including vintage concerns, economic conditions impact, and fraud risks.
• Stablecoin implications for deposits, payment networks, and monetary policy transmission.
• Regulatory uncertainties, particularly regarding capital regulation alignment between the U.K., Europe, and the U.S.

Q: On U.S. consumer top line and U.K. mortgages A: Angela Cross discussed the sustainability of NIM, momentum in noninterest income, and the robustness of the U.K. mortgage market with stable margins.

Q: On U.S. investment banking capital and private credit risks A: Venkatakrishnan and Angela Cross talked about capital regulation implications for U.S. investment banking and private credit risk management, including vintage concerns.

Q: On U.S. consumer RoTE in 2026 and stablecoins A: Angela Cross discussed U.S. consumer RoTE guidance and Venkatakrishnan explained stablecoin implications for deposits and payment networks.

Q: On private credit economics and Kensington lending A: Venkatakrishnan and Angela Cross explained private credit risk management practices and Kensington's role in U.K. lending.

Q: On U.K. RWA deployment and mortgage headwinds A: Angela Cross discussed RWA deployment timing and the impact of mortgage maturities from the COVID-19 period.

Q: On strategy update and structural hedge A: Angela Cross provided details on the strategy update and discussed the structural hedge's maturity and yield projections.

Q: On distribution and costs A: Angela Cross discussed the share buyback cadence and cost efficiency efforts, including structural cost actions.

Q: On private credit collateral and U.S. cards pipeline A: Venkatakrishnan and Angela Cross addressed private credit collateral reviews and U.S. cards growth opportunities.

Q: On IB performance and U.K. customer behavior A: Venkatakrishnan discussed investment bank progress and Angela Cross talked about U.K. customer behavior and credit demand.

Q: On litigation risk and private banking growth A: Angela Cross addressed litigation risk and provided insights into private banking growth prospects.

Q: On IB RWAs and returns A: Angela Cross and Venkatakrishnan discussed investment bank RWA targets and progress in achieving return goals