Barclays Sees Resilient U.K. Demand Fueling Loan Growth and Tech Expansion

Resilient U.K. demand is supporting loan growth: Barclays reported 5% U.K. loan growth in the first half, driven by household and corporate borrowing, mortgage market-share gains and technology investment. The bank expects U.K. net interest income of about £8.2 billion.

Expansion is progressing in the U.S. and investment bank: Barclays’ investment bank delivered a 15.5% first-half return on tangible equity, while its U.S. Consumer Bank increased deposits by more than 15%, improved net interest margin and is broadening beyond credit cards through partners including Samsung and Best Egg.

Barclays is increasing efficiency and technology spending: The bank plans an additional £300 million in structural cost-reduction investment this year while targeting a high-50s cost-income ratio. It also aims to move all data to its enterprise platform by 2028 and is using AI to reduce contact-center workloads and fraud-related calls.

Barclays NYSE: BCS CFO Anna Cross said the bank continues to see resilient conditions among U.K. consumers and businesses, supporting loan growth across retail and corporate banking, while the company invests in technology, expands its U.S. consumer offering and works to reduce its structural cost base. Speaking at a company event, Cross said the U.K. backdrop has remained supportive, citing nominal GDP growth above 4%, rising real wages and low unemployment. She said Barclays has seen quarter-on-quarter loan formation among both households and corporate customers, with corporate debt-to-GDP at an all-time low and businesses showing demand for financing related to productivity and technology investments.

Cross said potential changes to the U.K. bank surcharge would have a limited direct effect on Barclays’ returns. Each percentage point of the surcharge is worth roughly £35 million to the bank, she said, while the broader government signal around growth and investment is more consequential.

Barclays reported 5% U.K. loan growth in the first half, including particular strength in corporate banking. Cross said the bank has not observed a pull-forward in demand and that Bank of England data for July supported the continuation of second-quarter trends.

She attributed growth partly to “self-help” initiatives, including a shift from a single-brand to a multi-brand retail business. In mortgages, Barclays’ Kensington capability has broadened the bank’s market reach, including higher loan-to-value lending. The share of high loan-to-value mortgages in its flow rose to 21% from about 13%, Cross said. Technology investments have also supported mortgage market-share gains. Barclays’ flow share has exceeded its stock share in nine of the last 10 quarters, according to Cross. The bank is also using the Tesco, Avios and Amazon brands in its card offerings.

In U.K. corporate banking, Cross said Barclays has the largest level of corporate deposits among U.K. banks and remains positioned to serve companies ranging from small businesses to clients requiring investment-banking support. Its U.K. corporate loan-to-deposit ratio has risen to 35% from 31%, but remains below the 50% to 75% range Cross cited for many peers. She said the expansion has not changed the bank’s risk profile materially.

Cross described the U.K. deposit market as competitive, particularly in fixed-term deposits, though she said the environment is different from 2023.