Barclays Reports Q2 2026 Results: Full Earnings Call Transcript

Barclays (NYSE: BCS ) held its second-quarter earnings conference call on Tuesday. Below is the complete transcript from the call. APIs provide real-time access to earnings call transcripts and financial data. Visit to learn more.

3 billion, up 61% from the previous year. 8% for the first half, with all three UK businesses delivering RoTEs above 20%. Barclays announced strategic acquisitions, including Best Egg and GoHenry, to enhance loan capabilities and attract new customer segments. Investment in technology and operational improvements are expected to drive future cost flexibility, with plans to achieve a RoTE greater than 14% by 2028.

S. Consumer Bank showed strong digital growth with over 25 million customers, and a new partnership with Samsung Wallet was announced. 5 billion, reflecting broad-based growth and productivity improvements in the investment bank. Operational efficiencies have resulted in £350 million of gross savings year-to-date, with an improved cost-to-income ratio of 54% from 59% a year earlier.

The company remains optimistic about the UK economy, citing corporate lending growth and increased investment confidence among UK corporates. Barclays plans to continue its focus on achieving a low 50s cost-income ratio by 2028, driven by ongoing investments in technology and process improvements. Full Transcript OPERATOR Welcome to Barclays Half Year 2026 Results Analyst and Investor Conference call. This call will be recorded for replay and transcription purposes.

These will be published on Barclays' investor relations website in line with Barclays' privacy policy. S. securities laws. These statements can be identified by the fact they relate to future events and circumstances and sometimes use words such as may, seek, continue, aim, anticipate, target, project, expect, estimate, intend, plan, goal, believe, achieve, or other similar words.

Forward-looking statements are based on the current beliefs and expectations of Barclays' directors, officers, and employees and are subject to significant risks and uncertainties. No forward-looking statement is a guarantee of future performance, and the Barclays Group's actual results, financial condition, or performance could differ materially from those contained in such statements. Subject to applicable laws and regulations, Barclays undertakes no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

For more information on forward-looking statements and other important information, please refer to the disclaimer notice in the presentation slides which accompany this call. At the end of the presentation there will be a question and answer session. If you would like to ask a question, please press star followed by one on the telephone keypad at the start of the question and answer session. If you change your mind and wish to remove your question, please press star followed by two.

Please stand by and you'll be placed through to the call shortly. 8% for the first half, we are balancing progressive returns and distributions with investment to secure sustainably higher RoTE. We are increasing shareholder returns, announcing a £1 billion share buyback and an £800 million interim dividend. 3 billion, up 61% versus the first half of 2025.

In our investor update in February this year, I spoke of an accelerating ambition for Barclays forging segment-leading, operationally efficient businesses primed to support growth. We said we would build the foundations for an all-weather RoTE from 2026 to 2028 with the aim of sustainably higher returns beyond 2028. As we discussed, our businesses are now revolving around technology, and our aim is to build standardized foundations, modernized approaches, and harmonized systems and processes.

All of this is powered by our talented and inventive colleagues, and we are using additional capacity from our strong first half profitability to structurally improve Barclays' returns. This program is showing encouraging results. Therefore, after our increase in distributions, we will use some of the capacity from our stronger first half profitability to take further cost actions later in 2026. We anticipate that this will create greater cost flexibility from 2027 onwards.

These plans increase our confidence in delivering a 2028 RoTE greater than 14%, accelerating our progress towards an all-weather RoTE. Anna will expand on this shortly. All three UK businesses delivered RoTE above 20% this quarter with consistent volume and revenue growth. S.

5% RoTE excluding the American Airlines gain on sale. Operational improvements across the group are delivering stronger structural returns and a better customer experience. We have achieved around £250 million of growth efficiency savings so far this year. As I have mentioned, we want our businesses to be segment-leading, driving growth through new capabilities and deeper client relationships.

S. consumer bank is entirely digital with over 25 million customers and not a single branch. In this quarter we completed the acquisition of Best Egg, adding advanced consumer loan capabilities for our customers and partners. S.

Our segment-leading offering in the UK is Premier Banking. In this quarter we have commenced a refresh of our banking app and launched Premier Wealth Management to provide planning and advice to Premier customers with no upfront fee. We have also announced the acquisition of GoHenry, which we expect to complete later this year, and this will help attract the next generation of customers to Barclays UK. Lastly, we are expanding and enhancing our branch network to meet the changing preferences of our customers.

Our segment-leading proposition for wealth customers in the UK also extends to providing low-cost, transparently constructed, risk-appropriate products to help them build their financial futures. In addition to Premier Wealth Management, which has no upfront fee, from 31 May 2026 we have removed custody charges for all customers of Barclays Direct Investing, our self-directed investment platform. This is now the most competitively priced such alternative for those who seek full-service investing with the security of a bank provider. I am highly confident in achieving the group RoTE greater than 12% in 2026, progressing to more than 14% in 2028.

2% in the past 12 months, and we have driven this improvement through consistent execution of our plan. 5 billion of income this year versus the original £30 billion target. This reflects broad-based franchise growth and progress to drive greater productivity in the investment bank. The benefits of strong performance to our shareholders: we have announced £9 billion of distributions since 2024, well on track for more than £10 billion at the end of this year.

And by growing our highest-returning UK businesses, we are building the foundations for sustainably stronger returns in 2028 and beyond. I have told you before that the UK is a great place in which to do business and from which to do business. Global and domestic events have not changed this. The UK economy has been growing in nominal and real terms and at a faster rate than the Eurozone, and this has supported real wage growth, rising house prices, and stable employment.

And as you can see from our results for several quarters, Barclays is helping foster UK growth, not just benefiting from it. Anna will outline how we are doing so shortly. Declining investment since the late 2000s meant that UK corporate debt to GDP had fallen to a multi-decade low. Corporates have had the capacity to invest, but not the confidence.

This seems to be changing. The majority of corporates we surveyed tell us that they are gaining confidence in their prospects. Firms plan to increase investment in the next 12 months, including in technology. This is broad-based across sectors and regions.

With overall UK corporate lending up 9% in the past year, Barclays is backing the future of customers and clients across the UK. We are driving UK growth and prosperity, and all the while bringing stronger and more consistent returns for shareholders. Anna, over to you to take us through the second quarter financials in more detail. Anna Cross, Group Finance Director Thank you, Venkat, and good morning everyone.

Slide 6 summarizes the financial highlights for the second quarter and first half, but I will begin with slide 7. 2% benefit from the AA portfolio sale. Profit before impairment increased by 29%, reflecting income growth and positive operating jaws of 9%. 7p.

This is disproportionately driven by operational progress, with attributable profit up 36% year on year. 2 billion of buybacks executed in the last 12 Months further amplified this. 3 billion and expect 2026 to be the ninth consecutive year of income growth, as you can see on slide 8. 9 billion in Q2.

5 billion, up half a billion from prior guidance. Group NII excluding IB and head office increased by 10% year on year. Lending momentum continued across all divisions while deposit growth supported full reinvestment of the structural hedge. 7 billion in 26.

Structural hedge income growth is predictable and benefits all divisions. Accounting for circa 45% of Q2 Group NII, it will drive around half of the planned Group income growth from 25 to 28 and remain a meaningful tailwind beyond. 5% reinvestment yield. 3%, further supporting NII in future years.

Moving to cost, the Group cost-to-income ratio improved to 54% from 59% a year earlier. Year to date we have delivered 350 million of gross efficiency savings, including 200 million in Q2. Total costs increased by circa 300 million year on year, reflecting business growth actions. These include around 200 million of additional compensation accruals in Q2 in the Investment Bank to better align income and costs, and a decision to shift the compensation mix of material risk takers, our highest paid employees.

Reflecting regulatory changes, awards to be granted from 27 will move towards higher variable and lower fixed pay with a shorter vesting period. This will increase costs in H2 by 100 to 150 million, weighted to the IB, and provide greater cost flexibility from 2027. As referenced by Venkat, we anticipate taking additional structural cost actions in H2 26, funded by stronger H1 profitability. Our recent run rate is around 300 million in each of full year 24 and 20.

Having recognised around 100 million so far this year, we anticipate up to 500 million in H2. Given an expected ROI of around 100% within 12 months, these actions should drive a commensurate improvement in 27 gross efficiency. The Group's distribution plans and financial targets will not be impacted, including the high-50s cost-income target. Turning to impairment, the Q2 Group impairment charge of 571 million equated to a loan loss rate of 51 basis points.

Consumer and Corporate balance sheets remain robust and borrowers are behaving rationally. As an accounting matter, consensus unemployment expectations increased as we anticipated, consuming the post-model adjustments that we recognized last quarter in Barclays UK and US Consumer Bank. We retained a 68 million PMA in the Investment Bank, recognizing downside bias due to global macro uncertainty. For 26 we continue to expect a Group loan loss rate around the top of the 50 to 60 basis point range.

US consumer behavior remains resilient, as we show on slide 45 in the appendix. We had expected the American Airlines portfolio exit to increase 30-day and 90-day delinquency rates by circa 30 bps and 20 bps respectively. Instead, both rates fell in the quarter. This reflected repayments due to seasonal tax refunds which were larger than usual following US tax changes.

Delinquencies in the General Motors portfolio also normalized as expected. Turning to UK lending, consistent execution of the strategy means that we have deployed 25 billion of UK business growth RWAs since 24, on track for circa 30 billion by the end of 26. UK lending grew 5% year on year, consistent with our guidance and recent track record. Our mortgage application share increased versus Q1, having exceeded the stock share for the past nine quarters, and our retention experience remains strong.

The multi-brand strategy is also working in cards, demonstrated by consistent acquisitions since Q1 25. As you can see in the top right, business and corporate investment appetite remained strong. Core business banking lending has grown consistently for six quarters and UK Corporate lending grew by 12% year on year, continuing the trend of growing faster than the UK market for the past 18 months. The next slide shows how we are doing this as part of the Corporate & Investment Bank.

Prior to resegmentation in 24, UK CB did not have the capital to lend nor the investment in technology that it needed. As you can see in the top left, this resulted in a loan-to-deposit ratio of 31% compared with 50% to 75% for peers, and a lending market share of 9% versus 22% for deposits. Since then we have been on a journey to rebuild UK CB. Whilst we have further to go, lending share has risen by 70 basis points and deposit share by 40 basis points, with the loan-to-deposit ratio increasing to 35%.

Lending has grown by 19% in the past two and a half years. We have attracted around 1,400 new clients in this time, with around 40% already borrowing from us, driving circa 70% of loan growth. The risk characteristics of these clients is similar to the existing book, as you can see from the default grade statistics in the bottom left. Pleasingly, we have halved the time taken for new clients to use four or more products.

Investments in iPortal are delivering real benefits, with 65% of client interactions now self-serve. There are further opportunities as we add functionality to the enhanced mobile app and migrate all clients to iPortal during 26, reducing the number of access platforms from five to one. Now turning to Barclays UK, we show the financial highlights on slide 16 but I will talk to slide 17. 4%.

Income grew by 7% year on year while costs were flat, supporting positive operating jaws and a 3% reduction in the cost-income ratio to 53%. During Q2 we integrated Tesco Bank's finance and HR systems. We continue to expect a low-50s cost-income ratio in 26, though the anticipated SBAs that I discussed earlier may lead to higher costs in H2 versus H1. These will drive gross efficiency savings in 27, supporting lower year-on-year costs in 27 and 28.

NII increased to 2 billion, up 8% year on year and 1% quarter on quarter. Structural hedge income momentum was partly offset by product margin headwinds, which were slightly more pronounced than in Q1. The structural hedge top-up at the end of last quarter led to a switch from product margin to hedge income with minimal net effect. Maturities of higher-margin mortgages written in early 21 reduced product margin as expected, but the ISA market was larger and more competitive.

In Q3 we expect a neutral to positive product margin despite competitive deposit pricing, reflecting card seasonality and day count. 3 billion guidance range. 7 billion in Q2, with stable current and savings accounts. We priced time deposits selectively to deepen Premier customer relationships.

The acquisition of Gohenry, which we expect to complete in Q4, provides further opportunities to drive our Premier strategy. Lending has grown consistently for two years, including 5% year on year growth in Q2, as the strong mortgage application volumes that I called out last quarter drove strong completion in June. 3%. Income grew by 8%, driven by strong NII, up 15% year on year reflecting volume growth and structural hedge momentum.

Loans increased 12%, and we grew deposits. 9% in Q2, in line with the greater than 25% target in 26 and 28. Client assets and liabilities grew 8%, and favorable valuation effects contributed to a 15% year on year increase in AUM. 3 billion.