ii view: Barclays works hard to hit performance targets

Full-year results to 31 December

• Revenues up 6% to £26.8 billion
• Pre-tax profit up 24% to £8.1 billion
• Capital cushion, or CET1 ratio of 13.6%, down from 13.8% a year ago
• Final dividend of 5.5p per share
• Total 2024 dividend up 5% to 8.4p per share
• Total 2024 share buybacks of £1.8 billion
• Return on Tangible Equity (ROTE) of 10.5%

Guidance:

• New £1 billion 2025 share buyback programme
• Maintained ambitious to return at least £10 billion of returns between 2024 and 2026

Chief executive Mr Venkatakrishnan said:

"In 2024 we met our financial targets, delivering for our customers and clients, with operational and financial performance improvement driven by disciplined execution of the three-year plan. 

"Our new guidance for 2025, including Group RoTE of c.11%, represents an important next step in the journey towards our 2026 targets, including Group RoTE of greater than 12%. We have also announced a share grant for our colleagues to further align their work with shareholders' interests and enable them to benefit tangibly from the firm's progress and success."

• Invest with ii: SIPP Account | Stocks & Shares ISA | See all Investment Accounts

ii round-up:

Barclays (LSE:BARC) conducts business in the three areas of personal and corporate banking, credit card lending, and global investment banking. It operates across five divisions.

Barclays UK, the retail banking business, serves around 20 million customers, while UK Corporate banking has a relationship with over a quarter of all UK companies. Barclays Investment Bank assists multinational corporations and institutional clients globally, Private Banking and Wealth Management (PBWM) helps UK and overseas customers, and Barclays US Consumer Bank serves a 20 million customers in the world’s largest credit card market.

For a round-up of these latest results announced on 13 February, please click here.

ii view:

Over the last decade, Barclays has remained a bank undergoing change. A broad focus on the UK and US follows exits from European Retail Banking and Africa. Competing against UK rivals including Lloyds Banking Group (LSE:LLOY) and NatWest Group (LSE:NWG), group strategic aims include creating a simpler organisation, improving both customer service and investor returns, as well as achieving a better balance of capital allocation by business and region to provide more financing for customers. 

For investors, an uncertain economic outlook and the threat of stubborn inflation given a US driven trade war, are an overhang. A prospective price/earnings ratio above the three-year average may suggest the shares are not obviously cheap. Currency headwinds are a risk given the size of revenues generated overseas, while rival investment banks such as those owned by JPMorgan Chase & Co (NYSE:JPM) and The Goldman Sachs Group Inc (NYSE:GS) are not standing still.

• Lloyds Bank making progress despite profits miss
• Still plenty to like in NatWest's annual results
• ii view: Aviva excels and predicts Direct Line will be growth booster

On the upside, a series of performance improvement targets continue to be pursued. The addition of Tesco Bank adds a new brand name along with £8.1 billion in unsecured balances. The bank's diverse business model regularly sees challenges at one division countered by gains elsewhere. A capital cushion of 13.6% remains within management’s 13-14% target range, while shareholder returns include a forecast dividend yield of around 3% as well as a new £1 billion share buyback programme for 2025.  

For now, and despite continued risks, a consensus analyst fair value estimate above 340p per share is likely to see fans of this diverse banking group remain optimistic about long term prospects.  

Positives

• Business diversification
• Attractive dividend yield (not guaranteed)

Negatives

• Uncertain economic outlook
• Previous litigation and conduct issues

The average rating of stock market analysts:

Buy