Barclays posted a £2.3bn pre-tax profit for the third quarter, narrowly missing an internal consensus of £2.4bn, after its investment bank fell short of revenue forecasts despite a strong performance on the trading floor. As City AM reported, the group-wide figure was still up 12 per cent on the same period in 2025.
Total income at the investment bank came in at £3.1bn against a £3.3bn forecast, with the division growing just one per cent year-on-year. The shortfall weighed on a quarter where other parts of the bank performed more strongly.
Trading gains offset by fixed income decline
Barclays’ equities desk was a bright spot, with income soaring 47 per cent to £1bn, lifted by market volatility stemming from the US-Iran war. Fixed income told a different story: income fell 19 per cent year-on-year to just over £1bn, as lower client activity in rates and credit and wider macroeconomic headwinds weighed on the division.
UK retail banking fared better. Income in that division rose five per cent in the quarter to £1.8bn, supported by structural hedge earnings and growth in mortgage balances.
Overhaul on track despite the miss
CS Venkatakrishnan, Barclays’ chief executive, has been reshaping the investment bank as a central plank of his multi-year strategy. His near-term goal is to bring the division’s profitability ratio — return on tangible equity (RoTE), which measures a company’s net income relative to the average value of its common equity — into line with a group-wide target of 12 per cent by year-end. On a year-to-date basis, the investment bank’s RoTE came in at 13.5 per cent, a rise of 60 basis points against the equivalent period in 2025. For the group as a whole, year-to-date RoTE stood at 13.8 per cent, up from 12.3 per cent a year earlier.
City AM reported on 20 October 2026 that the investment bank’s RoTE reached 10.6 per cent in 2025 and surpassed 15.5 per cent in the first half of 2026, and that its cost-to-income ratio improved to 54 per cent in the first half of 2026, compared with 62 per cent in 2025. Venkatakrishnan aims to lift the group’s RoTE to above 14 per cent by 2028.
On the cost side, operating expenses reached £4.6bn for the quarter. The bank recorded £201m in Structural Cost Actions, up from £93m in the prior period, after saying it had reduced its cost base through “technology-enabled FTE [Full-Time Equivalent] reductions, creating capacity for further investment in the business.” A further £300m of such actions is earmarked for the fourth quarter of 2026. Barclays also announced a £500m share buyback alongside the results.
Budget pressure on the banking sector
The results arrive less than a week before Chancellor John Healey delivers his first Budget. Barclays and the broader sector are expected to face higher taxes, with Healey reportedly under pressure from left-wing Labour members and trade unions calling for steeper levies on banks following a year of strong profits. The most straightforward mechanism available to the Chancellor would be raising the banking surcharge, which currently sits at three per cent after being cut from eight per cent under Jeremy Hunt in 2023. A reversal of that reduction is understood to be under discussion, which would raise around £2bn a year.
