I expected good things from the Barclays (LSE: BARC) share price, but I never expected this. The FTSE 100 bank is up a mind-boggling 242% over two years. That’s despite wider economic uncertainty and falling interest rates, which should squeeze bank profits by narrowing the margin between what they pay savers and charge borrowers.
Yet that hasn’t shackled Barclays shares. The rally continued throughout 2025, with the stock now up 67% over the last 12 months as the bank shines undimmed. How long can this stellar run continue?
I’d expect Barclays shares to look more expensive. Today’s price-to-earnings ratio of 13.4 isn’t exactly cheap, but it’s below the FTSE 100 average P/E, currently around 18.
FTSE 100 sector recovery
The same applies to its price-to-book ratio, now at 1.08, close to fair value. Rivals Lloyds Banking Group and NatWest trade at P/Bs of 1.3 and 1.36 respectively, making them a tad more expensive. Again, nothing alarming here.
Back in 2023, P/Es for the big FTSE 100 banks were as low as five or six, and P/B ratios hovered around 0.5. They were genuine bargains back then. Not so much today.
Barclays’ profit growth has been impressive, rising 24% from £6.56bn in 2023 to £8.11bn in 2024. Earnings per share jumped 11% from 32.4p to 36p over the same period. Investor sentiment does appear to be running ahead of the actual numbers.
Barclays has overseas growth opportunities, particularly in the US and the Middle East, adding both excitement and risk compared to Lloyds, which is purely a UK play today. The Barclays share price dipped on 12 January after Donald Trump proposed a one-year 10% cap on credit card interest rates, which is the kind of risk Lloyds doesn’t face.
Ultimately, Lloyds could bang its head against a domestic growth ceiling, while Barclays is free to target new territories. That doesn’t mean one is better than the other, but it’s something investors need to consider.
Growth and buybacks
The trailing Barclays yield is disappointingly low at 1.75%. That’s down to two things. First, the soaring share price. Second, the board now focuses on rewarding shareholders through share buybacks. Which should also support the share price.
Personally, I prefer dividends, which is why I hold Lloyds, but I don’t turn my nose up at a nice buyback. Barclays is in the process of returning £10bn to shareholders by the end of 2026.
So, can Barclays continue its rampage? The global economy isn’t exactly thriving, tariffs are a worry, and a stock market crash can never be ruled out. Brokers remain cautious. Seventeen analysts provide one-year share price forecasts and they produce a median target of 504.1p. If correct, that’s up a modest 5.5% from today’s 477.5p. Which confirms my suspicions that the excitement is drawing to a close. Thirteen out of 20 brokers still rate Barclays a Strong Buy, though, with just two recommending Sell.
I still think Barclays is worth considering today, but only with a long-term perspective. Share price growth is likely to be less rampant, but the total potential return remains tempting.
