Barclays share price has stalled in the past two months as concerns about its investment banking division remain. The stock initially peaked at 316p on March 3 and has now pulled back to 293p as the focus shifts to the upcoming financial results and its investment bank division.
Investment bank challenges remain
Barclays is one of the top European banks with a valuation of over $53 billion. It is a giant company that operates in about 40 countries, including in the UK and New York.
Barclays operates its business in two key segments: Barclays UK and Barclays International. The latter business includes its Corporate and Investment Bank (CIB) and Consumer, Cards, and Payments (CCP).
Its investment bank is involved in areas like mergers and acquisitions, corporate banking, FICC trading, and corporate lending. FICC stands for fixed income, commodities, and currencies.
This division is going through major challenges this year as corporate activity slow in areas where Barclays operates. The volume of M&A in the US this year stand at $467 billion, a few points below the same period last year. In Europe, M&A volume has jumped by about 4% this year. The key bright spots in global M&A this year is in Canada, Japan, Asia, and Austraasia.
Analysts are concerned that the Trump administration has not been all that friendly to corporate dealmaking as was widely expected. This performance means that the division could be a drag when the company publishes its financial results.
The most recent numbers showed that Barclays investment bank’s income stood at £2.6 billion in the fourth quarter, an increase from the £2 billion it made a year earlier. Its profit before tax increased slightly to £0.5 billion.
Barclays other businesses are doing well
The numbers showed that Barclays’ business did well in 2024 as its other divisions continued doing better than the management estimated. Its return on tangible equity rose to 10.5% in 2024, higher than the estimated 10.0%.
Like other European companies, Barclays is rewarding its shareholders well. It returned £3 billion to these shareholders last year through a combination of dividends and share buybacks. The dividends stood at £3 billion, giving it a yield of about 2.5%.]
Barclays aims to boost its shareholder returns by gradually reducing its CET-1 ratio, which stood at 13.6%. It will achieve that by distributing at least £10 billion to shareholders until 2026. This big number represents about 4% of the combined valuation.
Barclays is also working to align its costs. Its operating costs dropped by about 1% in 2024, while the company has committed to slash about £700 billion worth of cuts from its corporate and investment bank division through 2026.
Cutting these costs will be crucial as the company braces for more interest rate cuts that may affect its net interest income.
Barclays share price analysis
BARC stock chart by TradingView
The daily chart shows that the BARC share price has stalled in the past few months as concerns about its investment bank business remained.
Barclays has remained slightly above the ascending trendline that connects the lowest swings since January 13. This trendline is the diagonal of the ascending triangle pattern, a popular bullish sign in technical analysis.
Barclays share price has remained above the 50-day and 100-day moving averages, a sign that bulls have prevailed.
Therefore, the stock will likely have a strong bullish breakout, with the initial target being the upper side of the triangle at 311p. A move above that level will point to further gains to 350p. However, a drop below the lower side of this triangle will signal more downside over time.
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