Barclays (BCS) Q2 FY25 earnings call: guidance and Q&A

Given the comfortable 13.7% CET1 and £10bn+ distribution plan, where is the upside — more distributions or M&A firepower — and will banking fees pick up enough to offset any markets normalization?

Cross said the capital position simply reflects strategy execution; the hierarchy is intact — regulation first, then distributions (up 21% YoY, buyback up 33%), then organic UK investment, and the plan remains organic. Venkat said the IB combines sustainable structural gains with cyclical swings; the banking headwind is dissipating as deal activity returns while markets could benefit from longer-term positioning replacing short-term risk management.

“our capital position just reflects the execution of the strategy... the capital hierarchy remains completely intact.”

asked by Alvaro Serrano (Morgan Stanley) · answered by Cross / Venkatakrishnan

Can you size the historic swap effect on the product margin, is the ~£8.3bn 2026 NII consensus achievable, and are you more confident on the 2026 US impairment guide of ~400bps?

Cross reaffirmed the >£7.6bn BUK NII guide and said the swap effect was known when guidance was upgraded, is purely accounting timing (most of the Q2 consensus miss, similar in Q1), and will not recur; H2 is the jumping-off point for 2026. On US impairments she pointed to seasonal QoQ decline, 30-day delinquencies down 20bps, and comfort within the 50-60bps group guide despite the GM day-1 and migration charges. Venkat added US and UK consumers remain resilient with strong employment.

“it's probably most of the consensus miss in Q2... It's not operational, purely accounting timing.”

asked by Guy Stebbings (BNP Paribas) · answered by Cross / Venkatakrishnan

With the IB beating for six quarters and consensus over £1bn below your IB expectation, is the £30bn revenue guide conservative, and does 3% revenue / 2% cost growth beyond 2026 make sense at a footprint level?

Cross reiterated the 2025/2026 targets, noting a 13% H1 RoTE and momentum across all five businesses, with NII, card maturation, structural hedge and IB structural progress underpinning confidence into and beyond 2026. Venkat said an at-scale bank should grow roughly at nominal GDP — ~4.5-5% in the US and UK — absent market-share capture, framed as a reasonable assumption rather than a target or forecast.

“a large at-scale bank like us should grow at top line roughly at the nominal rate of the economies in which we are.”

asked by Jason Napier (UBS) · answered by Cross / Venkatakrishnan

If promotional cards are booked at effective interest rates, why the H2 pickup, why has the UK deposit book grown only once in eight quarters, and how big is Kensington?

Cross declined to detail EIR assumptions but said cards are treated conservatively and the 2024 cohort is maturing nicely. UK deposits are broadly tracking peers with stable current-account share, evidenced by rolling 100% of the hedge versus a 90% assumption. On Kensington she wouldn't give balances but noted high-LTV mortgages are now ~25% of flow (up from ~15%), with ~4x richer margins and strong retention, now fully integrated.

“On equivalent products, they're about 4x the scale of a normal BUK mortgage margin.”

asked by Rob Noble (Deutsche Bank) · answered by Cross

Do potential US eSLR changes threaten IB financing growth, does a more benign CCAR reduce the case for the US consumer business, and what might the UK capital review and ring-fencing changes deliver?

Cross said Barclays is confident growing prime and fixed-income financing (expanding into Asia), noting leverage is not currently binding for all US peers, and that CCAR gave a good result (10.8% low point, 3.3% stress buffer) with diversified banks faring better; the US consumer business offers diversification and improvable mid-teens returns. Venkat welcomed the broad UK capital review, strongly defended ring-fencing as depositor protection, and argued some regulation is excessive 'gilding the lily' that could be relaxed to aid growth.

“there is no trade-off between financial stability and growth. He's absolutely right.”

asked by Chris Cant (Autonomous) · answered by Cross / Venkatakrishnan

Why did you reinvest the FX tailwind into IB RWAs this quarter (unlike Q3 last year), is 56% of group the peak, and does the Q2 RWA-productivity level support the 2026 RoTE target?

Cross emphasized IB RWAs have been broadly flat for 3.5 years by strategic intent; quarter-to-quarter variation is just client-activity timing, not more risk (stable VaR, two loss days). She said RWA discipline and IB growth are not mutually exclusive — flat RWAs alongside a 9% income CAGR — and the QoQ productivity dip is normal IB seasonality, with income over average RWAs up ~80bps YoY to 6.7%. Venkat added the focus is on consistency and quality of returns, not just their level.

“The RWAs in the IB have been broadly flat for 3.5 years. That is our clear strategic intent.”

asked by Chris Hallam (Goldman Sachs) · answered by Cross / Venkatakrishnan

How do you weigh margin versus volume on the shrinking UK deposit book, and what does the AA-out/GM-in mix shift mean for the $40bn receivables, >12% NIM and ~400bps cost-of-risk targets?

Cross explained the ISA season was unusually large and early (market flows ~£6bn one week in April versus ~£1bn/week in May-June); Barclays stepped back from uneconomic fixed-term pricing but grew ISA balances YoY and maintained current-account share. On US consumer she reaffirmed NIM rising on repricing and +27% deposits, C/I at 48% and falling, and the intended shift from ~15% to ~20% retail (largely via GM) for better risk-adjusted returns — but stressed RoTE is the North Star and they won't chase growth that compromises it.

“RoTE is the North Star. We're not going to grow it to meet the target and compromise RoTE.”

asked by Andrew Coombs (Citigroup) · answered by Cross

Do you expect a positive product-margin contribution in 2026, and how will you manage IB investment and costs if markets revenue stays strong?

Cross declined to be drawn on 2026 product margin, flagging offsetting numerator/denominator effects: continued asset origination (four quarters of mortgage growth, dilutive on mix but higher NII) versus larger promotional-card maturities that mainly hit in 2026 and beyond. Venkat said IB investment in markets technology and targeted banking segments (tech/healthcare M&A, corporate and transaction bank) is delivering as planned, and Barclays will keep operating to that plan.

“the longer maturities, which is the larger part of the promotional balance mix really start to mature in '26 and beyond.”

asked by Amit Goel (Mediobanca) · answered by Cross / Venkatakrishnan

Where does the extra hedge tailwind come from into 2027 if the exit yield is near the 3.5% reinvestment rate, and could you operate towards the lower end of the 13-14% CET1 range given Pillar 2A relief and the SCB review?

Cross said the 2027 average hedge yield will still be below 3.5%, so continued reinvestment simply lifts the average — nothing quirky in the 2026 maturities — and highlighted the high locked-in levels (97% for 2025, ~80% line of sight for 2026). On capital she maintained 13-14% is the right range given multiple uncertain regulatory moving parts (FPC, Basel 3.1/Pillar 2A, international alignment), prioritizing the at-least-£10bn distribution while awaiting regulatory clarity; she did not commit to the lower end.

“the average yield on the structural hedge in 2027 will still be below 3.5%. Simplistically, that is what we're saying.”

asked by Jonathan Pierce (Jefferies) · answered by Cross

If UK macro/budget nervousness stalls RWA deployment, would you do M&A to reach £30bn, and do you still expect costs to fall towards ~£17bn in 2027?

Cross said the plan is and always has been organic, with £17bn deployed at ~£2bn/quarter and momentum picking up across cards, mortgages and now UK Corporate/business banking, so the £30bn is achievable without M&A; the capital hierarchy (regulation, ≥£10bn distributions, UK deployment) is intact and returns won't be compromised to hit a target. On costs she corrected the timing to 2026 (not 2027) for costs coming down, reaffirming the 61% 2025 C/I guide with H2-skewed structural actions and £1.35bn through a £2bn savings target.

“it is and always has been an organic plan. And our capital hierarchy... remains intact.”

asked by Perlie Mong (Bank of America) · answered by Cross