Barclays PLC reported a 24% surge in annual pretax profit for 2024, exceeding expectations. This strong performance was fueled by robust growth in investment banking income and a solid performance in its domestic lending business in the UK. The positive results prompted the bank to raise its performance targets for 2025, aiming for a Return on Tangible Equity (RoTE) of around 11%.
Table Content:
Barclays Bank Logo
UK Economic Landscape and Barclays’ Performance
This financial success comes amidst a backdrop of regained political stability in the UK, although accompanied by tax increases implemented by the new Labour government to address public finances. These changes have impacted investor confidence, creating a complex economic environment. Despite this, the UK economy saw surprising growth of 0.1% in the final quarter of 2024, offering a glimmer of hope for the country’s financial outlook.
Barclays CEO C.S. Venkatakrishnan expressed confidence in the UK government’s commitment to economic growth, acknowledging that the effects of policy changes take time to materialize. This positive outlook aligns with the bank’s own strategic plan, initiated in February 2024, which focused on cost reduction, capital returns to shareholders, and investment in its high-performing UK business. This strategy has contributed significantly to the bank’s share price appreciation over the past year.
Profitability and Future Targets
Barclays achieved its 2024 performance goals, including a RoTE of 10.5%, meeting its guidance of greater than 10%. The newly announced target of approximately 11% RoTE for 2025 signifies a significant step towards the bank’s ambitious 2026 target of exceeding 12% RoTE. While analysts viewed the results positively, they noted that the substantial share price increase over the past year might moderate immediate market reactions. However, the bank’s stock is still considered undervalued by some analysts. Barclays reported a pretax profit of £8.1 billion ($10.12 billion) for the year ending December 31, 2024, slightly surpassing analysts’ forecasts of £8.07 billion.
Stock Market Graph
Investment Banking and Key Revenue Drivers
Barclays’ investment banking division played a pivotal role in the bank’s overall performance, generating nearly half of the lender’s £26.8 billion in income. The UK business contributed £8.3 billion, while the U.S. consumer bank added £3.3 billion. The investment bank’s total income reached £11.8 billion, exceeding analysts’ predictions. This success was driven by increased dealmaking and trading activity, a trend observed across the global financial sector. U.S. bank executives have expressed similar optimism for the coming year, anticipating that tax cuts and deregulation under President Donald Trump will stimulate business activity and capital markets. Barclays demonstrated strong performance in its trading business, with fixed income, currencies, and commodities revenue rising 29% in the final quarter of 2024. Equities revenue also saw a significant increase of 40% during the same period, outperforming major U.S. rivals. However, investment banking fees from M&A deals and fundraising lagged behind the performance of Wall Street counterparts.
Looking Ahead
Barclays’ strong financial results and upwardly revised targets indicate a positive trajectory for the bank. The bank’s commitment to its strategic plan, coupled with the improving economic outlook in the UK, positions Barclays for continued growth in the coming years. Furthermore, the extension of Nigel Higgins’ chairmanship for another three years provides leadership continuity as the bank pursues its ambitious goals. While challenges remain in the global economic landscape, Barclays’ performance demonstrates resilience and adaptability in navigating complex market conditions.
