Barclays is aiming to increase its market share in advisory and capital markets to help it achieve higher revenue targets this year and in 2028, after a respectable performance for the investment bank last quarter on the back of strong trading revenue growth.
The British bank said on Tuesday it aims to achieve a return on tangible equity (ROTE) of at least 12% this year and at least 14% in 2028. Subsequently, ROTE in 2025 was 11.3%, in line with the target of 11% or more. RoTE in 2024 was 10.5%.
As part of the plan, the firm aims to increase the investment bank’s RoTE from 10.6% in 2025 to about 12% this year and to at least 13% by 2028. Investment banking is the group’s lowest-earning division, but its RoTE has improved from 8.5% in 2024. The plan is based on compound annual profit growth rates in the “low single digits.”
Chief Financial Officer Anna Cross said the investment bank’s goals are based on flat fees for the industry, growing market share in advisory and capital markets and strengthening its share in trading after an uptick in recent years.
“In the banking industry, it’s been around 3% so far. We’re expecting it to rise to around 3.5%, so we’re seeing some progress,” Cross told reporters during a conference call. “We have the talent in place, we have seen a 20% increase in banker productivity, and we are confident we can continue to grow our share given the investments we have made.”
He said it would also be buoyed by higher revenue from the international corporate bank, part of the investment banking division, which includes transaction banking.
“Investment banks’ revenue growth targets assume market share gains without increasing costs or RWAs, which appears somewhat ambitious, but potentially achievable,” Citigroup analyst Andrew Coombs said in a note.
powerful securitization
Barclays traded as much or better than its U.S. rivals in the October-December period, with revenue from fixed income, currencies and commodities up 10% from a year earlier to 1.02 billion pounds ($1.4 billion), with securitized products particularly strong.
Equity income rose 16% to £703m, driven by strong performance in prime services and equity derivatives. Prime balances grew 30% over the year.
The bank said its markets division’s profits increased year-on-year for the seventh consecutive quarter.
However, the investment banking division faced a tougher situation, with revenue flat on the same period last year at £1.07bn, as equity capital markets revenue fell 43% to just £56m in the quarter. The bank claimed this was because many of the transactions it was involved in were postponed due to the U.S. government shutdown at the end of the year.
Debt capital markets revenue increased 3% to £336m in the fourth quarter, with M&A advisory fees up 13% to £214m.
“The M&A pipeline is strong, with our share of announced fees and volumes increasing year-over-year, expected to close in 2026,” Cross said.
Barclays said it would continue to invest in the investment bank as the bank hires in 2023 and 2024 are beginning to pay off.
The report said FICC’s revenue rose 14% in the fourth quarter at constant exchange rates, with equity trading up 21% and its investment banking division up 3%, as the weaker pound weighed on it in sterling terms. The six largest U.S. banks reported a 3% increase in FICC revenue, a 20% increase in equities, and a combined 16% increase in investment banking.
The investment bank made a pre-tax profit of £679m in the fourth quarter, with profits up 7% to £2.79bn, an increase of 44% on the same period last year. For the full year, the division’s profits rose 22% to £4.61bn, with revenue up 11% to £13.1bn.
The group’s pre-tax profit for the fourth quarter was £1.86 billion, up 12% on the same period last year. In 2025, profits rose 13% to £9.14bn and revenue rose 9% to £29.1bn.
Barclays this week missed out on the acquisition of asset manager Evelyn Partners, which rival NatWest bought for £2.7bn on Monday. Santander UK bought retail bank TSB last year, and in October it spent $800 million to buy US personal loans platform Best Egg.
CEO CS Venkatakrishnan told reporters about all the deals needed to meet requirements related to scale, integration and appropriate pricing. “If we don’t do something, it doesn’t meet one or more of these characteristics for us…We’re going to do it our way,” he said.
Former Barclays CEO Jess Staley also continues to cast a shadow over the bank following further revelations of her close ties to disgraced financier Jeffrey Epstein. Staley served as CEO from December 2015 to October 2021, but stepped down after British regulators found “misleading statements” about his relationship with Epstein. Regulators then banned him.
Barclays said it had nothing to add following the recent release of documents relating to Epstein and his relationship, but Mr Venkatakrishnan added: “We are deeply disappointed and shocked by the moral depravity and corruption you are reading about in the latest series of articles.”
Source: IFR
