Barclays‘ (LSE: BARC) shares have had a cracking run. And speaking of full-year results Tuesday (10 February), CEO CS Venkatakrishnan said: “Barclays achieved all financial guidance in 2025. RoTE was 11.3% as all divisions delivered double-digit RoTE. We distributed £3.7bn to our shareholders, including the £1.0bn share buyback announced today, up from £3.0bn in 2024.”
Profit before tax for the fourth quarter hit £1.9bn. That’s ahead of the consensus for £1.72bn, and well up on the £1.7bn in the same quarter last year. It helped take full-year profit to £9.1bn, up a very nice 13% over the previous year. Earnings per share came in 22% ahead of 2024
So did the Barclays share price gain much in response to what looks like a cracking set of results?
Not exactly. At the time of writing, the shares are up only around a couple of percent. Maybe it’s an off day for banks, with Lloyds Banking Group and NatWest Group dipping a bit?
I’m certainly not seeing anything to worry about in Barclays’ plans for the next three years. Not when the boss went on to say: “Our aim is to secure sustainably higher returns through to 2028 and beyond, delivering Group RoTE of greater than 14% in 2028 and greater than £15bn of capital distributions to shareholders between 2026 and 2028.“
We’re looking at a CET1 ratio of 14.3%, which amounts to 14% taking into account the new £1bn share buyback. What does that mean? It’s a headline measure of liquidity, and that’s a solid figure. It suggests a strong balance sheet.
Expectations reset?
The dividend yield isn’t much to shout about these days. The 8.6p per share just announced makes for just a 1.8% yield on the previous day’s closing share price. Income investors, it seems, could do a lot better with the 4% expected from NatWest. Even Lloyds still offers 3.5% after the soaring share price rises of the past couple of years.
Barclays shares have soared by a stunning 230% over the past five years, so we really have to take that into account. I suspect investors might simply be seeing this as the end of the rapid recovery phase. And the current share price might just represent fair value for a bank based on expectations for the next few years.
Valuation outlook
Barclays recorded earnings per share of 43.8p for 2025, solidly ahead of the 36p we saw in 2024. And that gives us a trailing price-to-earnings (P/E) ratio of 11. With the economic outlook so uncertain, I do think that could well be high enough for a FTSE 100 bank right now.
Barclays UK hit its net interest income guidance with £7.7bn. But that’s sure to come under pressure when Bank of England rates move down further.
Forecasts out to 2027 see the P/E dropping to eight. And I reckon that would be cheap again. So yes, I rate Barclays as definitely worth considering even after the shares’ two-year bull run. Personally, I’m looking for better dividends from the financial sector.
