There are plenty of reasons to believe that Barclays (LSE:BARC) shares are offering good value at the moment (2 April). However, the bank’s share price has fallen over 15% in the past two months, suggesting a degree of scepticism among investors.
Let’s see what’s going on.
Delving deeper
Like many FTSE firms, Barclays has been affected by the conflict in the Middle East. But the bank’s shares were falling before the first missiles were fired. On 3 February, the share price reached a 52-week closing high and has since been drifting downwards.
Some of this can probably be explained by a bit of profit taking. After all, the February peak was also the highest the bank’s share price has been since 2017, just before the start of the global financial crisis. However, the extent of the dip suggests there’s more going on than a few investors cashing out.
In fact, it appears to coincide with increased concerns about the state of credit markets, particularly in the US. According to Russell Investments, interest coverage for loans has fallen from 3.2 times in 2021, to around 1.5 times now.
But it’s not just in America where fears have been raised. In its global stability report, the International Monetary Fund claims that 40% of private credit borrowers have negative free cash flow.
Significant loan defaults would be bad news for the global economy, but also for Barclays. At 31 December 2025, it disclosed £430bn of lending on its balance sheet.
UK exposure
Closer to home, the bank’s heavily reliant on a domestic economy that the OECD claims could be one of the hardest hit if the closure of the Hormuz Strait continues for much longer.
Last year, Barclays said it was allocating more capital to the UK, where it already has 20m retail customers and claims to process over 40% of the country’s debit and credit card transactions.
Cheap on paper
A closer look at the group’s numbers suggest that its shares offer excellent value. Of the FTSE 100’s five banks, it has the second lowest historic price-to-earnings ratio and the lowest price-to-book ratio.
In 2025, it reported a return on tangible equity – a key measure of profitability — of 11.3%. It’s now set a target of “greater than 14%” by 2028.
From 2026-2028, it plans to return at least £15bn to shareholders through a series of share buybacks and dividends. To illustrate the significance of this number, Barclays’ current market-cap is around £53bn.
My view
Personally, I think the group’s shares are cheap. Others agree. Analysts have a consensus 12-month target that’s around 40% higher than today’s share price.
Importantly, Barclays is more than just a high street bank. In 2025, nearly 45% of its income came from its investment arm. When the war in the Gulf ends — hopefully, soon – this part of the business is likely to be in a position to pick up a few bargains. In the short term, this division could experience some earnings volatility but in a few years’ time, it could be booming.
For these reasons, I plan to hold on to my shares. Other investors looking to take a position in the sector could consider buying some for their own portfolios.
