Barclays is aiming to increase market share in advisory and capital markets to help hit higher returns targets for this year and 2028, after a decent last quarter for its investment bank on the back of strong growth in trading revenues.

The UK bank said on Tuesday it is targeting a return on tangible equity of at least 12% for this year and at least 14% for 2028, after delivering an RoTE of 11.3% for 2025, in line with its target of 11% or more. Its RoTE was 10.5% in 2024.

As part of the plan, it aims to lift RoTE for its investment bank to about 12% this year and at least 13% by 2028, from 10.6% in 2025. The investment bank is the lowest returning unit in the group, although its RoTE improved from 8.5% in 2024. The plan is based on “low single-digit” percent compound annual growth in income.

Chief financial officer Anna Cross said the investment bank targets were based on flat industry fees and increasing market share in advisory and capital markets and consolidating share in trading after gains in recent years.

“In banking, we’ve been running at around 3%. We expect to grow that to around 3.5%, so some progress,” Cross told reporters on a conference call. “We’ve got the talent, we’ve seen a 20% increase in the productivity of our bankers, so we’re confident we can continue to grow share given the investments we’ve made.”

She said an uplift will also come from increasing revenue from its international corporate bank – which is part of the investment bank division – including from transaction banking.  

“The investment bank revenue growth targets … appear slightly ambitious, predicated on market share growth with no cost/RWA increase, but are potentially feasible,” Andrew Coombs, analyst at Citigroup, said in a note.

Strong securitisation

Barclays matched or bettered US rivals in trading in the October–December quarter, with revenues from fixed income, currency and commodities of £1.02bn (US$1.4bn), up 10% from a year earlier, with particular strength in securitised products. 

Equities revenue rose 16% to £703m, with strength seen in prime services and equity derivatives. Prime balances increased 30% during the year.

The bank said it was the seventh consecutive quarter of year-on-year income growth for the markets arm. 

But it had a tougher time in investment banking, where revenues were flat from a year earlier at £1.07bn, due to a 43% slump in equity capital markets revenue to just £56m in the quarter. The bank blamed that on a US government shutdown at the end of the year postponing many of the transactions it was involved in.

Debt capital markets revenues in Q4 were up 3% to £336m and M&A advisory fees increased 13% to £214m.

“The M&A pipeline is strong and our share of announced fees and volumes due to complete in 2026 has increased year on year,” Cross said.

Barclays said the impact of hiring bankers in 2023 and 2024 had started to come through and it would continue to invest in the investment bank.

It said the weak US dollar was a drag when converted into sterling, and at constant exchange rates, FICC revenues in Q4 were up 14%, equities trading up 21%, and investment banking up 3%. The big six US banks reported a 3% rise in FICC revenues, a 20% jump in equities and a 16% rise in investment banking in aggregate.

The investment bank made a pretax profit of £679m in Q4, up 44% from a year earlier, as income rose 7% to £2.79bn. For the full year, the unit's profit jumped 22% to £4.61bn as income rose 11% to £13.1bn. 

Group pretax profit for Q4 was £1.86bn, up 12% from a year earlier. Profit for 2025 was up 13% to £9.14bn, as income grew 9% to £29.1bn. 

Barclays this week missed out on the purchase of wealth manager Evelyn Partners, which was bought by rival NatWest on Monday for £2.7bn. It was also pipped by Santander UK on the purchase of retail bank TSB last year, but in October it spent US$800m to buy US personal loan platform Best Egg.

CEO CS Venkatakrishnan told reporters all deals needed to meet requirements related to adding scale, integration and being priced well. "If we don’t do something, it didn’t meet one or more of those characteristics for us ... we will do it our way," he said.

Former Barclays CEO Jes Staley also continues to cast a shadow over the bank after more revelations about his close ties to disgraced financier Jeffrey Epstein. Staley was CEO from December 2015 to October 2021 and left after the UK regulator found “misleading statements” in how he described his relationship with Epstein. The regulator subsequently banned him.

Barclays said it had nothing to add after the latest release of documents related to Epstein and his relationships, but Venkatakrishnan added: “I’m deeply dismayed and shocked by the moral depravity and corruption that you’re reading about in the latest set of instalments”.

Source: IFR