RBC Capital Markets has bumped up its price target for Barclays PLC (LSE:BARC) to 355p from 340p, keeping its 'outperform' rating ahead of the bank’s second-quarter results.
The boost comes after RBC raised its profit forecast for 2026 by 5%, thanks mainly to stronger income from Barclays UK and improved revenues in the Investment Bank.
The upgrade is driven by a few key factors: better loan growth, improved net interest margins (how much the bank earns on loans versus what it pays on deposits), and higher income from the bank’s structural hedge.
The latter is basically a way Barclays protects itself from interest rate swings. While loan loss provisions (money set aside for bad debts) have gone up a bit.
RBC sees overall profits moving in the right direction. It expects Barclays to hit a return on tangible equity of 11% in 2025, matching the bank’s own guidance, and to improve to 12.5% in 2026, beating its target.
Costs should come down too, with a cost-to-income ratio around 60%, reflecting tighter control on spending.
The price target is based on a breakdown of Barclays’ different divisions and their expected returns, discounted back to 2025 using a standard rate.
The shares were up 0.7% at 346p.