Barclays Grows Profit by 13%, Bets on AI to Cut £2 Billion in Costs

London - EcoPulse24
Barclays reported robust financial results for 2025, posting a 13% year-on-year increase in pre-tax profit to £9.1 billion, exceeding analyst expectations. The bank's revenue reached £29.1 billion (+9%), with tangible return on equity (RoTE) rising to 11.3%. Earnings per share grew 22% to 43.8p, and the CET1 capital ratio stood at 14.3%. CEO C.S. Venkatakrishnan confirmed all 2025 financial targets were met, with all divisions delivering double-digit RoTE.

Barclays raised its main RoTE target to over 14% by 2028 (previously 12% by 2026) and announced plans to return over £15 billion to shareholders between 2026 and 2028 through dividends and share buybacks. For 2025, capital returns included a £1bn buyback and total distributions of 8.6p per share, totaling £3.7bn (+23% vs. 2024).

The bank highlighted AI as a key tool for boosting productivity and efficiency, targeting £2bn in cost savings by 2028 (with £700m already achieved in 2025). No specifics were given on workforce reductions, but Barclays aims to modernize legacy technology.

The investment bank division led growth, with revenue up 11% to £13bn, comprising 45% of group revenue. The cost-to-income ratio in this segment fell to 62% from 67%. All divisions achieved double-digit RoTE in 2025. Net interest income (excluding investment bank and head office) hit £12.8bn, meeting guidance.

For 2026, Barclays projects revenue of around £31bn, net interest income above £13.5bn (UK bank: £8.1-8.3bn), and a cost-to-income ratio in the low 50s by 2028, targeting a 5%+ compound annual income growth (2025-2028).

Barclays follows Lloyds in setting more ambitious profitability targets, benefiting from favorable rates and improved regulatory and economic conditions. NatWest and HSBC are expected to announce new targets later in February. Notably, NatWest recently acquired Evelyn Partners for £2.7bn, a deal Barclays bid for but lost.

Analysts described Barclays' results and new targets as somewhat conservative, noting challenges in growing US consumer banking revenue amid strong local competition. Barclays stock was little changed at Tuesday's open, having doubled over the past year, indicating positive expectations are largely priced in.

EcoPulse24 Analysis:
Strengths: Barclays exceeded all financial targets, with a strong capital base (CET1 at 14.3%) supporting generous distributions and growth investment. Consistent double-digit RoTE across divisions and sustained tangible net asset value growth reflect strategic balance and operational maturity.
Challenges: Heavy reliance on investment banking (45% of revenue) exposes Barclays to market volatility. The AI strategy lacks clear implementation details and workforce impact, raising execution questions. Losing the Evelyn Partners bid highlights relative weakness in UK wealth management.
Outlook: Ambitious but achievable targets if current momentum holds and markets remain stable. Delivering £2bn in cost savings will be key to reaching the 14% RoTE target by 2028. With shares up 100% over the year, generous distributions offer downside protection for investors.

Publication date: 10 February 2026