Introduction & Market Context

Barclays PLC (LSE:BARC) presented its Q2 2025 results on July 29, 2025, revealing substantial growth across key financial metrics and confirming the bank is on track to meet its ambitious 2026 targets. The presentation highlighted a 28% year-over-year increase in profit before tax, reaching £2.5 billion for the quarter, while statutory Return on Tangible Equity (RoTE) climbed to 12.3%, up from 9.9% in Q2 2024.

The results come amid Barclays’ continued execution of its strategic plan, with the bank showing progress toward a more balanced business mix and improved operational efficiency. Following the earnings presentation, Barclays’ stock showed minimal movement, with a modest increase of 0.02%, though it has demonstrated strong momentum with a 40.9% return over the past year.

Quarterly Performance Highlights

Barclays reported impressive financial metrics for Q2 2025, with significant improvements across most key performance indicators. The bank’s income rose to £7.2 billion, representing a 14% increase year-over-year, while earnings per share jumped 41% to 11.7p.

As shown in the following comprehensive overview of the group’s performance against financial targets:

The bank’s Q2 2025 results demonstrate substantial progress toward its 2026 targets, with statutory RoTE of 12.3% already exceeding the >12% target set for 2026. The cost-to-income ratio improved to 59% from 63% in the same quarter last year, moving closer to the “high 50s%” target for 2026.

Capital distributions also increased significantly, with total payouts of £1.4 billion in the first half of 2025, representing a 21% increase compared to H1 2024. This puts Barclays on track to meet its target of at least £10 billion in total payouts for the 2024-2026 period.

Detailed Financial Analysis

The bank’s financial performance showed strength across multiple metrics. The Q2 2025 and H1 2025 results reveal consistent improvement in profitability and efficiency:

Barclays’ profit before tax increased to £2.5 billion in Q2 2025, up from £1.9 billion in Q2 2024, representing a 28% year-over-year growth. For the first half of 2025, profit before tax reached £5.2 billion, compared to £4.2 billion in H1 2024, a 24% increase.

The following chart illustrates the consistent improvement in RoTE and profit before tax performance:

Net interest income (NII) continues to be a key driver of the bank’s performance, with Group NII excluding Investment Bank and Head Office reaching £3.1 billion in Q2 2025, up 12% year-over-year. Barclays UK NII showed particularly strong growth, increasing by 16% year-over-year to £1.9 billion.

As illustrated in the following breakdown of net interest income growth:

The bank’s income mix has also evolved favorably, with stable income streams now constituting 73% of Group income, aligning with the target of >70% by 2026. This stability provides resilience against market volatility and supports consistent returns.

Business Segment Performance

All business segments delivered double-digit RoTE in Q2 2025, with particularly strong performance in the UK businesses and Private Banking & Wealth Management:

Barclays UK delivered an impressive 19.7% RoTE in Q2 2025, supported by 16% year-over-year growth in net interest income. The UK Corporate Bank achieved a 16.6% RoTE, while Private Bank & Wealth Management outperformed with an exceptional 31.9% RoTE.

The Investment Bank maintained solid performance with a 12.2% RoTE, already meeting its 2026 target of >12%. The US Consumer Bank improved to 10.2% RoTE, moving closer to its 2026 target of >12%.

Structural hedge income continues to provide a stable foundation for the bank’s earnings, with £2.8 billion generated in H1 2025. The following chart shows the evolution and projections for the structural hedge:

In the US Consumer Bank, delinquencies have shown improvement in line with normal seasonal trends, with 30-day delinquencies at 2.8% in Q2 2025 compared to 2.4% in Q2 2023, and 90-day delinquencies at 1.6% compared to 1.2% in the same period. The bank maintains strong coverage ratios to manage potential credit risks.

Strategic Initiatives and Outlook

Barclays expressed confidence in achieving its 2025 guidance and 2026 targets, highlighting progress toward a more balanced group with increased focus on UK businesses. The bank is on track for approximately £30 billion of UK RWA growth, with about £17 billion already deployed.

The following chart illustrates the bank’s confidence in achieving its targets and progress toward a more balanced business mix:

The bank has realized £200 million of the £500 million expected FY25 gross cost efficiency savings (approximately £350 million in H1 2025). According to the recent Q3 2025 earnings call, Barclays achieved the full £500 million in efficiency savings one quarter early, demonstrating strong execution of its cost management initiatives.

Looking ahead, Barclays has upgraded its 2025 RoTE guidance to over 11% (from approximately 11% in the Q2 presentation), with a reaffirmed target of more than 12% for 2026. The bank plans to announce new targets for 2028 in February, aiming to further enhance RoTE across its businesses.

Barclays’ strategic focus remains on balancing its business mix, improving operational efficiency, and delivering strong returns to shareholders through both dividends and share buybacks, including a recently announced £500 million share buyback program.

The bank’s consistent execution against its strategic plan and strong financial performance across all business segments position it well to meet or exceed its medium-term targets, despite ongoing economic uncertainties and competitive pressures in the banking sector.

Full presentation:

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