BARCLAYS (BARC) SHARES: 2025 PERFORMANCE IN UK, KEY DRIVERS, MILESTONES AND RISKS —'26 OUTLOOK

How did Barclays (BARC) shares perform in 2025?

Barclays PLC (LSE: BARC) shares delivered a mixed performance throughout 2025, reflecting a challenging yet opportunistic environment for British financial stocks. Investors witnessed fluctuations aligned with macroeconomic trends, interest rate shifts, bank sector sentiment, and evolving investor expectations. As one of the UK's largest banking institutions, Barclays remained heavily influenced by shifts in monetary policy, global economic indicators, and regulatory actions.

At the start of 2025, Barclays shares hovered near 160p, experiencing volatility throughout the year while closing around the 180–190p mark by December. This represented a modest year-on-year gain when compared to 2024’s flat performance, outpacing some FTSE 100 financial counterparts. Market optimism was spurred by improved earnings and the bank's continued cost-cutting strategy alongside robust investment banking activity, which notably benefited from increased M&A transactions and equity issuances.

Several factors underpinned the 2025 share performance:

• Interest Rate Environment: The Bank of England's monetary policy trajectory played a vital role. Interest rates peaked early in the year before easing slightly in Q3–Q4, impacting Barclays’ net interest margin.
• Loan Performance: The bank reported stable asset quality, with non-performing loan (NPL) levels improving modestly thanks to cautious lending standards and strong consumer balance sheets.
• Cost Reduction Drive: Announced in late 2024, a multi-year efficiency programme began to deliver results. Barclays targeted £1 billion in annual cost savings, enhancing investor confidence.
• Resilient UK Economy: Despite global economic slowdowns, the UK economy remained resilient in 2025 with modest GDP growth of 1.1%, providing a supportive backdrop for retail and commercial banking operations.

However, market analysts noted undercurrents of concern. Barclays’ large exposure to global markets meant vulnerability to international pressure points, including US regulatory reform, Eurozone instability, and above-average geopolitical risks influencing investor mood.

From a valuation perspective, Barclays traded at a forward P/E of around 6x by year-end 2025—below historical averages—suggesting either undervaluation or persistent market scepticism surrounding bank equities in a post-COVID, high-rate world.

What drove Barclays’ share movement and achievements in 2025?

The 2025 performance of Barclays shares was driven by a confluence of internal progress and external conditions. The bank made meaningful strides in both its retail and investment banking divisions while navigating a complex financial landscape domestically and abroad.

Here are the key drivers and milestones influencing Barclays shares in 2025:

• Digital Transformation Advance: Barclays accelerated its digital integration strategy across retail banking. Enhanced mobile experiences, AI-driven customer support, and streamlined onboarding processes drove higher customer engagement and operational efficiency.
• Return on Tangible Equity (RoTE): The bank achieved a RoTE of approximately 10.5%, beating analyst expectations and improving shareholder sentiment. This marked a notable recovery versus 2023–2024 levels, showcasing effective capital allocation and earnings generation.
• Share Buyback Programme: In Q2 2025, Barclays executed an additional £750 million buyback, returning value to shareholders and supporting share price momentum during mid-year volatility.
• Regulatory Capital Buffers: CET1 ratios stood firmly at 14.2% by year-end, reflecting conservative risk management and aligning with PRA expectations after macro stress tests. This provided further assurance to equity investors watching for capital risk.
• Expanded ESG Commitments: Barclays reinforced its climate financing position, committing £150 billion in green financing through 2030 as per its transition plan. Sustainability-conscious funds responded positively, leading to improved institutional ownership in Q3–Q4.

Operationally, Barclays’ investment bank enjoyed favourable conditions, including robust deal-making activity and steady fixed-income trading. While global issuance volumes fluctuated, the bank’s diversified capital markets business helped offset regional downturns.

In terms of geographic and business line performance:

• UK Retail Banking: Grew deposits by over 3% year-on-year, supported by higher savings product uptake due to attractive real rates post-peak inflation cycle.
• Credit Card Operations (Barclaycard): Posted improved margins due to reduced delinquency rates and higher average revolving balances.
• Corporate Banking: Saw increased loan originations, particularly among SMEs, as government-backed initiatives created a more conducive lending environment.

In summary, Barclays’ solid execution across multiple fronts, paired with a recovering macroeconomic backdrop and disciplined expense management, shaped a resilient performance story in 2025. These milestones laid the groundwork for a cautiously optimistic 2026 outlook.

What are the main risks and 2026 considerations?

Looking into 2026, shareholders, analysts and institutional investors remain cautiously optimistic but alert to multiple risk dimensions affecting the Barclays share trajectory. While the bank enters the year with solid operational momentum and strong capital metrics, questions linger about global banking headwinds and local economic resilience.

Key risks and watchpoints in 2026 include:

• Macroeconomic Uncertainty: Despite a buoyant end to 2025, concerns around UK stagflation resurface. Sluggish wage growth, persistently high rents, and public sector constraints may slow consumption and lending demand.
• Further Rate Cuts: Should the Bank of England opt for deeper rate reductions in 2026 in response to macro weakness, Barclays’ net interest margin may contract. A lower-for-longer path could pressure bank profitability, especially on the retail front.
• Global Regulatory Shifts: Potential regulatory clampdowns, particularly in the US and Europe, around capital distributions and investment banking practices may limit earnings from the bank’s more lucrative divisions.
• Elevated Credit Risk: Consumer credit growth may slow while default rates pick up if UK unemployment edges higher amid corporate cost-cutting. Rising defaults in SME or unsecured lending books could erode quarterly earnings stability.
• Technology Competition: Fintechs and neobanks continue to challenge traditional banks with low-cost, agile solutions. While Barclays is investing in tech, competitive pressure on fee income and customer retention will persist.

Strategic and positive developments to watch in 2026 include:

• Continued Shareholder Returns: Market participants expect Barclays to maintain or even increase its shareholder returns policy, given its earnings quality and CET1 strength.
• US Market Expansion: Barclays Capital’s assured positioning in the US bond and M&A market could lead to revenue upside, especially if dollar liquidity improves in H2 2026.
• Digital Growth Execution: Delivering further on its tech strategy could help Barclays leapfrog domestic peers in customer migration and operational efficiency.
• Cost-Saving Plan Update: Investors will closely examine FY2025 results in early 2026 for delivery against cost-cutting targets laid out in 2024. Missing benchmarks could stall earnings momentum.

Overall, while the risk factors heading into 2026 are significant, so too are the opportunities. Investors should remain diversified and alert to quarterly disclosures, regulator updates and macro shifts that could recalibrate Barclays’ growth path. Close attention to earnings quality and capital discipline will be central to evaluating the bank’s ongoing resilience and growth viability.