Barclays PLC (LSE:BARC) will be the first to report of the UK bank results season, next Thursday, 13 February, followed in quick succession by Natwest on Friday, Lloyds the following Monday and then the Asia-focused HSBC and Standard Chartered later that week.
Shares in Barclays have been the best performing over the past 52 weeks, up around 109%, with the FTSE 350 Banks index up almost 50% to the highest level since 2008.
In the fourth-quarter update, which will be wrapped up with full-year results, the lender is being tipped to potentially unveil a £1 billion share buyback as it looks to share the spoils with investors of its strong capital position.
Analysts at UBS recently raised their expectations for Barclays as they see the UK lender as benefitting from strong growth prospects in investment banking, where European firms are seen as trading at valuation discounts that are "too wide to ignore" compared to US counterparts.
Last month, JPMorgan kicked of the US bank earnings season with a 49% rise in investment banking fees, while Goldman Sachs smashed estimates thanks to higher net revenues across all segments, led by significant growth in Global Banking & Markets, where equities sales and trading and fixed-income, currency and commodities (FICC) trading were both stronger than expected.
As activity in the US market improves under the new administration, Barclays stands to gain disproportionately compared with its European peers, UBS reckons, with FICC trading seen as a key driver of growth and an area to watch in the guidance given on Thursday.
Barclays’ cost management and diversified revenue streams were also highlighted.
But City forecasts "seem fairly cautious" on the profit outlook, observed AJ Bell investment analyst Dan Coatsworth, with pre-tax earnings across the Big Five banks forecast to have grown by 3% year-on-year across 2024 and then dip slightly in 2025 to around the £48 billion mark.
Consensus pre-tax income for Barclays is £8.1 billion for the full year, against £6.6 billion the year before.
Barclays is forecast to declare a total dividend of 8.6p a share, with a total of £1.8 billion in share buybacks, which gives a total cash return for 2024 of £3 billion, or 7% of its stock market capitalisation
"Such bumper cash returns, with the prospect of more to come in 2025, may be the biggest reason of all behind the storming share price performance," said Coatsworth, adding that "it will be interesting to see if the torrent of buybacks abates now the share are no longer as cheap as they were" as Barclays trades within touching distance of historic net asset value per share, and rivals NatWest, Lloyds and HSBC all trade at a premium.