Barclays lifts profit and targets as it looks to US to boost returns

By Lawrence White

LONDON, Feb 10 (Reuters) - Barclays increased its profit by 12% in 2025 and on Tuesday raised its performance targets as the British bank looks to improve returns by cutting costs and improving income, especially in its U.S. business.

Profit before tax for 2025 of 9.1 billion pounds ($12.45 billion) was up from 8.1 billion pounds the year before and broadly in line with an average of analysts' forecasts.

Barclays also said it now expects to make a return on tangible equity of greater than 14% by 2028, up from previous guidance of greater than 12% in 2026.

Hitting the bank's new targets will rely heavily on growth in the United States, analysts said, where Barclays makes 50-60% of its investment bank revenue and where it has a growing consumer business focused on credit cards.

The bank has a number of ways to mitigate a 10% cap on credit card fees proposed in January by U.S. President Donald Trump, Barclays Finance Director Anna Cross told reporters.

"There are a number of levers we have to mitigate any impact, we expect we would see lower costs, lower impairment charges and our partnership model... would mean they would share some of the costs," she said.

Like many European banks, Barclays has enjoyed rising profits and a share price that has soared towards highs not seen since the aftermath of the financial crisis.

A favourable interest rate environment and more supportive economic backdrop have enabled banks to finally put nearly two decades of post-2008 crisis restructuring behind them.

Barclays CEO C. S. Venkatakrishnan, known as Venkat, said the bank would return more than 15 billion pounds of capital to shareholders between 2026 and 2028.

The results and new targets were overall somewhat muted, analysts at Citi said, with investors likely to be sceptical about its ambition to grow revenue from its U.S. consumer bank in particular, given heavy competition from domestic incumbents.

Shares in Barclays rose 1.5%, against a 0.3% drop in the benchmark FTSE 100 index .FTSE.

INVESTMENT BANKING FEES DISAPPOINT AGAIN

Barclays reported income at its investment bank rose 11% to 13 billion pounds in 2025, as its Global Markets trading business grew revenue 15% amid volatile markets.

However, investment banking fees fell 2%, undershooting double-digit gains from Wall Street rivals after missing out on key transactions, a problem previously flagged by the CEO.

London-based Barclays also announced 1 billion pounds in share buybacks and a 5.6 pence per share final dividend, taking total capital distribution for 2025 to 3.7 billion pounds, in line with analysts' expectations for 3.8 billion pounds.

Barclays follows rival Lloyds in setting out more ambitious profit guidance, as British banks benefit from higher rates, a more favourable regulatory and economic environment and the cost-saving potential of technology.

NatWest NWG.L, which reports earnings on Friday, and HSBC HSBA.L on February 25 are expected to announce more ambitious targets, Reuters reported last month.

UK banks are looking for ways to increase fee-based income from areas like wealth management to offset an expected drop in interest income as rates fall.

NatWest on Monday announced its largest acquisition since the financial crisis with a 2.7 billion pound ($3.68 billion) deal, including debt, to buy one of Britain's biggest wealth managers, Evelyn Partners.

Barclays had been among the bidders, Reuters reported.

($1 = 0.7312 pounds)