Barclays Plc earnings calls

Pillar 2A cut and 2028 costs

Q (Jonathan Pierce · Jefferies): He asked why the Pillar 2A drop is so large and whether this reflects a broader review. He also asked if the bank will need a higher CET1 buffer and how to think about 2028 costs.

A: Management said the 59 basis point MDA reduction comes from their annual Pillar 2A process, which includes but is not limited to Basel changes. They said the cut gives them more capital flexibility and they will continue to operate an appropriate buffer to the MDA. On costs they reiterated 2027 guidance is intact, expect modest cost growth, with more investment offset by higher efficiency.

"What we are saying is that we are expecting a reduction in our MDA of 59 basis points." — Anna Cross

Investment bank FICC and RWAs

Q (Alvaro Serrano · Morgan Stanley): He asked whether the weak FICC quarter was due to one-off marks or a new run rate and whether the bank will give the Investment Bank more balance sheet/RWAs going forward.

A: Management said parts of fixed income (rates in Europe and some credit) were weaker for a period but the franchise and client engagement remain strong. They highlighted good performance in equities, M&A and securitized products, and said Investment Bank RWAs have been broadly flat since 2022 (about GBP 195 billion to GBP 205 billion), though they are leaning into UK lending as a three-year review ends.

"The Investment Bank have been broadly flat since 2022, actually well before the plan that we are about to complete started even." — Anna Cross

Capital returns and Basel timing

Q (Chris Cant · Autonomous): He asked if the bank will revisit the >GBP 15 billion capital return aspiration now that Pillar 2A clarity exists and investments have accelerated.

A: Management said they will wait until Basel 3.1 implementation at year-end before reconsidering capital return ambitions. They reiterated their capital hierarchy: regulatory requirements first, then shareholder distributions, then investment, and said the high bar for additional returns remains.

"We are very keen to get through Basel 3.1 implementation at the end of the year before we give further consideration to this point with you." — Anna Cross

RWA range and 2028 costs

Q (Guy Stebbings · BNP Paribas): He asked whether the RWA range can be narrowed given the better-than-expected Pillar 2A, and whether efficiencies can more than offset growth and investments for 2028 costs.

A: Management said they will not narrow the RWA range now because Basel 3.1 is complex and the range reflects implementation mitigation uncertainty. They reiterated they expect modest cost growth and a 2028 cost-income ratio in the low 50s, and that they will keep driving operational efficiency while investing.

IRB change and UK rates impact

Q (Rob Noble · Deutsche Bank): He asked why the USCB IRB move gives only a minimal Pillar 2A change, whether leverage CET1 could bind, and what higher rates mean for the U.K. business and hedges.

A: Management said the IRB change is a modest, business-as-usual implementation and not a large Pillar 2A driver, and that nothing material is in the plan from that. On the U.K., they said funding pressure and competition for deposits come from strong lending in the sector, producing more covered bond issuance and intense term deposit competition; Barclays has strong liquidity and a structural hedge so can be selective and contain margin impact.

"We think that that comes not from the structural hedge directly, but it's actually coming from the fact that there has been strong lending in the sector." — Anna Cross

Deposit competition and USCB headwind

Q (Perlie Mong · BofA): She asked what front-end deposit competition is being seen and what the underlying product margin will be excluding an October hedge increase. She also asked about the GBP 20 million USCB non-NII headwind and how to think about that income line.

A: Management said term deposits are growing while current accounts are flat; they are not guiding NIM and warned that moving income into the structural hedge reduces product margin but is net nil for margin overall. On USCB they confirmed the roughly GBP 20 million headwind, and said they expect to rebuild to Q1-like levels by year-end, with cards and Best Egg originations showing good growth.

"The only thing we are calling out that is different, Perlie, is that GBP 20 million." — Anna Cross

Financing mix and AI efficiency gains

Q (Chris Hallam · Goldman Sachs): He asked for the split of financing revenue growth between equities and FICC, whether there was any deliberate capital reallocation, and whether AI increases the 2028 efficiency opportunity.

A: Management said financing growth has come largely from prime and derivatives in equities while parts of FICC were weaker in Q3, and that this is relationship-driven rather than a capital allocation issue. They also said technology and AI are increasing the efficiency opportunity and they have been spending about GBP 300 million to capture roughly GBP 700 million back.

"What you see here is that we have got pretty good cadence, Chris, going where we have been spending typically around GBP 300 million, getting about GBP 700 million back." — Anna Cross

Execution, risk and cost composition

Q (Jason Napier · UBS): He asked how management thinks about risk and earnings predictability given restructuring and acquisitions, and on slide nine he asked whether the GBP 1.4 billion of business growth/inflation/investment is normal and what it is funding.

A: Management said they aim for disciplined, energetic execution and prudent stewardship of capital and risk, stressing they follow capital rules in letter and spirit. On costs they said the slide nine items are run-the-bank costs (inflation, BAU investment and acquisitions) and should be seen as the cost of doing business, while separate investments target future fee growth.

"We think that is a cost of doing business, and therefore we're giving you a very fulsome run-the-bank cost here that includes inflation, includes that BAU investment, includes the cost of acquisitions also." — Anna Cross

Hedge allocation change and revenue outlook

Q (Andrew Coombs · Citi): He asked why hedge allocation to Barclays UK moved from 55% to 70% and whether that is a guide, and he asked for the puts and takes behind the GBP 31.5 billion revenue guide and confidence in it.

A: Management said the disclosure now shows income allocation (not growth) which explains the move to 70% because structural hedge income is growing faster outside BUK due to equity hedge and longer tenors of deposits. On the revenue guide they said year-to-date income is up 8%, Q4 needs about GBP 500 million more to reach GBP 31.5 billion, and they expect around GBP 200 million of that to come from NII with additional contributions from financing and M&A.

"So GBP 200 million of it, we believe, relates to NII." — Anna Cross

2028 revenue/CAGR and RoTE guidance

Q (Amit Goel · Mediobanca): He asked whether the cost guide plus modest cost growth implies higher 2028 revenue and whether the bank expects to materially beat its >14% RoTE target.

A: Management declined to comment on consensus or 2028 specifics beyond the guidance already given: they reiterated a greater than 5% revenue CAGR from 2025 to 2028, a cost-income ratio in the low fifties, modest cost growth, and RoTE guidance greater than 14%, and said they are focused on meeting those points but won't give further 2028 guidance now.

"We expect the cost-income ratio to be in the low fifties, and we have given you some guidance around absolutes and that we expect modest growth." — Anna Cross

Stage three change and market valuation

Q (Edward Firth · KBW): He asked why stage three coverage fell (driven by rest of world corporate) without extra provisions, and whether management is concerned by the group's cheap valuation and if anything can change that.

A: Management clarified the stage three movement relates to MFS when comparing full year to now and not a Q2–Q3 shift. On valuation, they said they focus on controlling inputs, disciplined execution and prudent capital/liquidity stewardship; they believe strong fundamentals and execution will eventually drive appropriate valuation.

"It's important for management teams to control the inputs, to run a company well, to produce the returns for the shareholders, and then the shareholders will eventually, I think, value it appropriately." — Venkatakrishnan Coimbatore Sundararajan

Hedge notional and mortgage spreads

Q (Benjamin Toms · RBC): He asked how much the structural hedge notional grew in October and whether higher swap rates allow mortgage spread growth to offset deposit margin pressure.

A: Management said they did not call out a notional change and balances were broadly stable; changing hedge notional reflects greater confidence in interest-sensitive balances and their caterpillar approach remains strict. On mortgages they said swap-driven price volatility affects pipeline mix, with remortgage demand strong and retention around 80%, helped by technology improvements.

"To the extent that we change the hedge notional, that means that we have more confidence in the stability of interest in sensitive balances." — Anna Cross

FICC trading vs client flow and financing share

Q (Alberto Artoni · Intesa Sanpaolo): He asked whether any proprietary or market-making positions affected FICC performance, and whether the bank can keep growing prime financing share versus fixed income financing.

A: Management said there was nothing to call out on proprietary positions; fixed income is client-driven with risk limits and prudent VaR management. For financing they said they focus on deep relationships with top clients and aim to gain share by doing more with those clients rather than expanding into riskier counterparties.

"There is nothing to call out. This is a client-driven business with risk management limits." — Venkatakrishnan Coimbatore Sundararajan

Financing returns and UK corporate lending

Q (Nicolas Payen · Kepler Cheuvreux): He asked which financing (prime or fixed income) gives better returns after funding/liquidity costs, and what the bottleneck is for deploying more deposits into U.K. corporate lending.

A: Management said Barclays has stronger market share in fixed income financing but has grown prime alongside it and runs a holistic client coverage across both. On U.K. corporate lending they said they are the largest corporate deposit bank with a low loan-to-deposit ratio, see material opportunity to lend more across segments, and have removed bottlenecks via iPortal technology and capital to support growth.

"We are the largest bank for corporate deposits in the U.K." — Anna Cross