Barclays‘ (LSE: BARC) shares have had a brilliant run. They’re up 46% over 12 months and 136% over five years, with dividends on top. When a FTSE 100 stock flies like this one, I find myself asking the same question: can it continue? Or should investors simply accept they’ve missed the boat, and target the next big recovery play?
Plenty of blue-chips could be ripe for a similar revival, but Barclays has momentum on its side. All the big UK banks have done well in recent years, for the same reason. Higher interest rates have allowed them to widen net interest margins, the difference between what they pay savers and charge borrowers.
At the start of the year, it looked like that benefit was set to fade, with inflation and interest rates expected to fall. The Iran war has changed that. Inflation jumped to 3.3% in March and it’s expected to climb higher. Interest rates may rise too, which will protect margins. However, it will have a negative impact elsewhere, say, by hitting demand for mortgages, or driving up loan impairments.
Can this FTSE 100 bank keep flying?
Barclays has a broader span than UK-focused banks such as Lloyds and NatWest, due to its US, investment banking and large corporate operations. That makes it potentially more rewarding in good times, but riskier in troubled ones. While recent market volatility will have boosted its trading arm, Barclays has more exposure to equity market bubbles and economic shocks, including threats in AI and private credit. I think investors need to take those risks into account too.
I hold Lloyds, and my shares have done brilliantly. I’ve been looking to supplement it with a second bank, and Barclays seemed the obvious pick, given its different focus. I baulked at the price though. An investor who got in five years ago would only have had to pay 181p per share. If they’d invested £10,000, they’d have bought 5,525 shares, ignoring trading charges. If they’d reinvested their dividends, they’d have even more today.
Today, the Barclays share price is 434p. To buy 5,525 shares now, I’d need to invest £23,978. If fact, I’d probably need to tuck away £25k, to reflect the dividends I’d missed. Which shows how brilliantly equities build wealth.
This stock still looks good value to me
When the Iran war started, Barclays shares plunged, and I wrote several articles for The Motley Fool highlighting the opportunity. Under our strict trading rules, I can’t just write about a stock then go and buy it. Which meant I missed the recent sharp rebound. While annoying, I still think the shares look good value today.
The price-to-earnings ratio is a modest 9.9%, well below today’s FTSE 100 average of just over 16. That’s above the five-year average of around 7.5 for Barclays, but still hugely tempting. This is a bank that posted an 11.3% return on tangible equity in 2025 and aims to deliver more than £15bn of capital to shareholders between 2026 and 2028, via dividends and share buybacks.
There are risks. An oil shock, spike in bad debts or private credit implosion could hit Barclays hard. If you’re thinking of gaining exposure to the UK banking sector, I still think it’s worth considering, even at today’s higher price.
