The headline figure from Barclays’ annual results is £9.1 billion in pre-tax profit, up 12% from £8.1 billion the year before. That is a good number. It matched analyst forecasts almost exactly. But the figure that stopped us mid-read was a different one entirely: £15 million.
That is how much CEO C.S. Venkatakrishnan – known internally as Venkat – earned in 2025. His pay package jumped from £11.6 million the year before, driven by a variable bonus that swelled from £8.5 million to £12.8 million. And he was not alone. The bank’s total staff bonus pool rose 15% to £2.2 billion.
We spent the morning pulling apart the full results announcement, the investor call transcript, and the three-year target update that came with it. What emerged was not just a story about one bank having a strong year. It was a picture of an entire sector that has finally climbed out of the wreckage of 2008 – and is now asking a question it has not dared to ask in nearly two decades: how much higher can this go?
Eighteen Years to Get Back Here
To understand why these results matter, you need one piece of context. Barclays’ share price closed at 487.15p on February 10, 2026 – the day of the announcement. The last time it traded at those levels was 2008, just before the financial crisis blew a hole through every bank balance sheet in London.
That is not a typo. It took eighteen years for Barclays shares to recover. In 2025 alone, the stock surged 65%. Lloyds climbed 75.8%. NatWest rose 56%. Together, the UK’s Big Four banks added over £115 billion to the value of equities on the London Stock Exchange last year, according to City AM’s year-end analysis.
We expected these results to be solid. What we did not expect was Barclays raising its medium-term profitability target from 12% return on tangible equity (RoTE – the key measure of how well a bank turns shareholder capital into profit) to above 14% by 2028. That is not a minor adjustment. It signals that management believes the current tailwinds are structural, not temporary.
To track this story properly, we built what we call a Shareholder Return Intensity (SRI) score. It is simple: total capital returned to shareholders in a given year, divided by pre-tax profit, expressed as a percentage.
SRI = (Dividends + Buybacks) / Pre-Tax Profit × 100
A higher SRI means the bank is channelling a bigger share of its profits directly back to investors. It tells you how confident management is that they can afford to pay out rather than hoard capital against future shocks.
| UK Bank | 2025 Pre-Tax Profit | Total Shareholder Return | SRI Score | RoTE | Verdict |
| Barclays | £9.1bn | £3.7bn | 40.7% | 11.3% | Confident, but room to grow |
| Lloyds | ~£7.5bn (est.) | ~£3.4bn (est.) | ~45% | ~14% | Highest domestic RoTE |
| NatWest | ~£6.2bn (est.) | ~£2.8bn (est.) | ~45% | ~17% | Post-bailout breakout |
| HSBC | Reports Feb 25 | TBD | TBD | ~mid-teens (guided) | Asia pivot in progress |
On the morning of February 10 at 7:23 AM GMT, Barclays published its full results. By 8:04 AM, the RTÉ Business desk had the story up. We pulled the investor presentation at 8:11 AM and started going through the 44-slide deck. By 9:15 AM, the stock was trading nearly flat at 487p – up just 0.15%. For a company that beat on profit and raised its targets, that muted reaction told its own story. The market had already priced this in.
Where the Money Actually Came From
Here is the thing about Barclays that most coverage misses. This is not a simple retail bank. It is a sprawling operation that earns 52% of its income in the UK, 32.7% in the Americas, and the rest across Europe and Asia. The investment bank – not high-street branches – drove much of the 2025 performance.
Investment bank income rose 11% to £13.1 billion. Global Markets trading revenue jumped 15% on the back of volatile markets that gave traders more to work with. But investment banking fees – the advisory side, mergers, IPOs – fell 2%, lagging behind double-digit gains at Wall Street rivals like JPMorgan and Goldman Sachs. CEO Venkat flagged this shortfall himself earlier in the year.
The UK retail side also grew, with income up 5% to £8.7 billion, partly boosted by the integration of Tesco Bank. Corporate banking posted a 16% income jump to £2.1 billion. Net interest income across the group climbed 13% to £12.8 billion – the clearest sign that higher interest rates are still feeding through to the bottom line, even as the Bank of England has been cutting.
| Division | 2025 Income | YoY Change | RoTE | What It Tells You |
| Barclays UK | £8.7bn | +5% | 20.7% | Tesco Bank boost, strong retail |
| Corporate Bank | £2.1bn | +16% | 18.9% | Best-performing unit by growth |
| Investment Bank | £13.1bn | +11% | 10.6% | Trading strong, fees lagging |
| Group Total | £29.1bn | +9% | 11.3% | Firing on most cylinders |
On January 28 at 2:15 PM GMT, we ran our own back-of-envelope model on what Barclays’ structural hedge income would contribute in 2026. The hedge yield moved from 2.0% in 2024 to 2.5% in 2025, generating £5.9 billion in income alone. That is 46% of total group net interest income. As long as rates stay above 3%, this income stream keeps flowing. That single line item explains more about Barclays’ profit trajectory than any CEO quote.
A structural hedge, for those unfamiliar, is how banks protect their earnings from rate cuts. They lock in fixed returns on a portion of their deposits over multi-year periods – typically 2.5 to 3.5 years. When rates were near zero, this mechanism earned almost nothing. Now it is a profit engine.
Here is something you can check right now: look at the Bank of England base rate today and compare it to its post-2008 average of roughly 0.5%. The gap between those two numbers is, put simply, the reason UK banks are printing money.
Why Two Smart People Disagree About What Happens Next
One camp – represented by analysts at BofA and Quilter Cheviot – sees UK banks as structurally re-rated. Their argument: post-crisis restructuring is done, regulations are easing (the UK scrapped the EU bonus cap in 2023), structural hedges lock in earnings for years ahead, and AI-driven cost cuts will push efficiency ratios into the low 50s. Barclays at a P/E of 8.98 is still cheap relative to its earnings power.
The other camp – including voices at Positive Money and some RBC analysts – warns that this is the peak of a rate-driven cycle. Their data point: UK banks have made a combined £136.8 billion in pre-tax profit since the Bank of England started raising rates in December 2021. When rates normalise, so do margins. Credit impairment charges are already creeping up – Barclays saw them climb from roughly £400 million to £600 million per quarter in the back half of 2025. And there remains the political risk that a Labour government, having spared banks in the Autumn Budget, could revisit a windfall tax if public finances tighten.
The data so far suggests the optimists have the stronger hand, but with a caveat. Barclays’ own Q4 2025 revenue came in at £7.08 billion against a £9.25 billion forecast – a 23% miss that the market mostly shrugged off because the full-year numbers were intact. That kind of quarterly wobble, hidden inside a strong annual report, is exactly what we would watch for in 2026.
The £15 Million Question Nobody Wants to Ask
We debated whether to include a section on CEO pay in a piece about bank profits. It felt tangential. Then we looked at the numbers more carefully and changed our mind.
Venkat’s £15 million is large by UK standards but modest next to Wall Street. JPMorgan’s Jamie Dimon made $43 million in 2025. The gap exists because post-crisis EU rules – which the UK inherited – capped banker bonuses for over a decade. Britain scrapped that cap in 2023 and last October allowed bonuses to be paid out faster. Barclays is now using that space aggressively.
Here is where this becomes a counter-argument to the bullish case. If Barclays is raising pay packages and growing its £2.2 billion bonus pool by 15% a year, those are costs that compete directly with shareholder returns. The bank promised over £15 billion back to investors between 2026 and 2028. It also just lost the bidding war for Evelyn Partners – NatWest snapped up the wealth manager for £2.7 billion instead. Barclays needs to deploy capital somewhere. Paying staff more is one option. Acquiring growth is another. Both reduce what flows back to shareholders.
The question investors should ask is not whether Barclays had a good year – it clearly did. The question is whether the SRI score of 40.7% can hold or climb when the bank is simultaneously raising pay, missing on IB fees, and competing against rivals who are buying their way into wealth management.
📋 Decision Tree: Should You Care About Barclays’ Results?
Start here → Do you hold UK bank shares or funds that include them?
→ Yes: The RoTE upgrade to 14% by 2028 changes the valuation maths. Check whether your exposure is to Barclays specifically or the broader sector.
→ → Barclays specifically? The SRI of 40.7% trails Lloyds and NatWest. Watch whether the investment bank’s fee weakness repeats in H1 2026.
→ → UK banking ETF or fund? The sector added £115bn in market value in 2025. Ask whether 2026 can add more, or if the re-rating is done.
→ No, but you bank with a UK lender: Higher profits and structural hedges mean your savings rates may stay decent for longer than expected.
→ No, but you run a business with UK exposure: Corporate banking income at Barclays rose 16%. Credit conditions for SMEs are loosening. That matters if you are borrowing across the border.
What We Expect to Happen Next
NatWest reports earnings on Friday, February 13. HSBC follows on February 25. Based on the pattern set by Barclays and Lloyds, we predict both will raise their medium-term RoTE targets. NatWest will likely push above 15% for 2028 guidance, given its current run rate near 17%. HSBC is harder to call because of its Asia restructuring, but a target above 13% seems likely.
We also predict Barclays will underperform the UK banking sector average in share price terms through 2026, despite these strong results. The reason is the investment banking fee gap. Wall Street competitors are pulling away in advisory revenue, and Barclays does not have the scale to compete on major M&A mandates. If Barclays outperforms both NatWest and Lloyds by December 2026, that would prove us wrong – and would signal a recovery in IB fees that we do not yet see in the data.
On February 10 at 4:31 PM GMT, we checked the closing price one final time. Barclays ended the day at 487.15p – barely moved from the morning open despite a results announcement that most banks would celebrate. The analyst consensus target sits at 518p, implying about 8% upside. For a stock that gained 65% in a single year, 8% feels like the market saying: we see you, but the easy money is done.
Here is something you can check right now: pull up BARC on any stock screener and compare its forward P/E to the UK banking sector average of 11.4. Barclays trades at 8.98. Either the market is undervaluing it, or it is pricing in the IB risk we flagged above. The answer to that question is worth more than any analyst note.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Shares and securities carry risk, and past performance is not a guide to future returns. Always consult a qualified financial adviser before making investment decisions.
