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Barclays‘ (LSE: BARC) shares have had a cracking run. And talking of full-year outcomes Tuesday (10 February), CEO CS Venkatakrishnan stated: “Barclays achieved all monetary steering in 2025. RoTE was 11.3% as all divisions delivered double-digit RoTE. We distributed £3.7bn to our shareholders, together with the £1.0bn share buyback introduced right this moment, up from £3.0bn in 2024.”
Revenue earlier than tax for the fourth quarter hit £1.9bn. That’s forward of the consensus for £1.72bn, and properly up on the £1.7bn in the identical quarter final 12 months. It helped take full-year revenue to £9.1bn, up a really good 13% over the earlier 12 months. Earnings per share got here in 22% forward of 2024
So did the Barclays share value acquire a lot in response to what appears like a cracking set of outcomes?
Not precisely. On the time of writing, the shares are up solely round a few p.c. Perhaps it’s an off day for banks, with Lloyds Banking Group and NatWest Group dipping a bit?
I’m actually not seeing something to fret about in Barclays’ plans for the following three years. Not when the boss went on to say: “Our purpose is to safe sustainably larger returns by means of to 2028 and past, delivering Group RoTE of higher than 14% in 2028 and higher than £15bn of capital distributions to shareholders between 2026 and 2028.“
We’re a CET1 ratio of 14.3%, which quantities to 14% taking into consideration the brand new £1bn share buyback. What does that imply? It’s a headline measure of liquidity, and that’s a strong determine. It suggests a powerful stability sheet.
Expectations reset?
The dividend yield isn’t a lot to shout about lately. The 8.6p per share simply introduced makes for only a 1.8% yield on the day prior to this’s closing share value. Revenue buyers, it appears, might do rather a lot higher with the 4% anticipated from NatWest. Even Lloyds nonetheless gives 3.5% after the hovering share value rises of the previous couple of years.
Barclays shares have soared by a shocking 230% over the previous 5 years, so we actually need to take that into consideration. I think buyers would possibly merely be seeing this as the tip of the fast restoration section. And the present share value would possibly simply symbolize honest worth for a financial institution primarily based on expectations for the following few years.
Valuation outlook
Barclays recorded earnings per share of 43.8p for 2025, solidly forward of the 36p we noticed in 2024. And that offers us a trailing price-to-earnings (P/E) ratio of 11. With the financial outlook so unsure, I do assume that might properly be excessive sufficient for a FTSE 100 financial institution proper now.
Barclays UK hit its web curiosity revenue steering with £7.7bn. However that’s certain to come back underneath strain when Financial institution of England charges transfer down additional.
Forecasts out to 2027 see the P/E dropping to eight. And I reckon that may be low-cost once more. So sure, I fee Barclays as positively price contemplating even after the shares’ two-year bull run. Personally, I’m on the lookout for higher dividends from the monetary sector.
