Barclays (LSE: BARC) shares have had a brilliant run, but I’m wondering if investors are beginning to take them for granted.
The Barclays share price has risen 147% over five years and, although the pace has cooled, it’s still 22% higher than a year ago.
Investors are understandably on edge, with bond yields rising, geopolitical tensions simmering and spending on AI infrastructure through the roof. Does that explain why Barclays looks so ridiculously cheap? Its trailing price-to-earnings ratio is just 10.4, while the forward P/E is even lower at 8.9.
The price-to-book value is about 1.1 times tangible net assets. Nothing to panic about there either. I think Barclays looks amazing value given what it’s delivered.
Profits keep rolling along
All the big FTSE 100 banks have done well lately. Higher interest rates have lifted lending income, while stronger balance sheets, better cost control and accelerating shareholder returns have helped rebuild confidence.
Barclays made £9.1bn profit before tax in 2025, up 13%, with Return on Tangible Equity (RoTE) of 11.3%. The first half of 2026 looked even stronger, with profit before tax up 17% to £6.1bn and RoTE rising to 14.8%.
The second quarter alone produced £3.3bn profit before tax, up 31% year on year.
Barclays is taking care of shareholders too, returning £3.7bn in 2025 and £2.3bn in the first half of 2026. The board plans to return at least £10bn of capital between 2024 and 2026, rising to £15bn between 2026 and 2028. However, the focus will be on share buybacks, which may put off investors who, like me, would rather receive dividends.
The trailing yield is just 1.85%, notably lower than rivals such as Lloyds and NatWest, but this is forecast to climb to 3.25% in 2026 and 4.05% in 2027. That’s not too shabby.
There are risks out there
There remain risks, particularly around Barclays’ global investment banking operation, which has hefty exposure to higher-risk areas such as private credit and structured financing to non-bank financial institutions. In the first quarter, it suffered a £228m impairment in securitised products after a sophisticated fraud linked to Market Financial Solutions. First-half credit impairment charges reached £1.4bn, up from £1.1bn a year earlier.
Barclays has big US and global markets operations, so a sharp market sell-off or recession could hurt trading income and increase bad debts.
Bank typically do better when interest rates are high, as this allows them to increase margins. The US Federal Reserve has just hiked to combat inflation, and there could be more in the pipeline, including in the UK. That could widen Barclays’ margins, but could also drive up bad debts. Also, higher gilt yields can make shares less attractive compared with cash and bonds.
If I didn’t already hold HSBC, Lloyds and NatWest, I’d buy Barclays in a heartbeat. I think it’s worth considering for those who’d like more exposure to FTSE 100 banks. And there are other great UK stocks I’d consider buying right now…
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Harvey Jones owns shares in HSBC, Lloyds and NatWest.
This story originally appeared on Motley Fool
