Barclays (LSE: BARC) shares soared from around 150p to over 470p between 1 January 2024 and 1 January 2026. That’s about 210%, representing more than a three-fold increase in price — spectacular growth in anyone’s books, particularly for a FTSE 100 bank.
Only NatWest Group came close, with about 193% growth in the same period, while Lloyds and HSBC trailed.
So does that mean the Blue Eagle bank’s profits are priced in, or could a new rally just be getting started?
2026 vs 2024
While the recent growth has been impressive, it’s fair to say the conditions that powered that rally are now fundamentally different.
Here’s a few key differences:
| Metric | 2024 | 2026 |
|---|---|---|
| Price-to-book (P/B) ratio | 0.5 | 1.3 |
| Interest rates (peak) | 5.25% | 3.75% |
| Return on tangible equity (RoTE) | 11.3% | 13.5% |
| Credit quality | 40bps | 74bps |
Essentially, what we were seeing in 2024 was the result of a post-pandemic recovery amid a rate hiking cycle. Now, with sluggish GDP growth, a cooling labour market, and geopolitical energy risks, the picture is vastly different.
In short, another 200%+ rally in the coming two years is far less likely than it was back then. But, that doesn’t necessarily negate the value proposition for the bank.
So what should investors expect?
A more sobering outlook
Taking into account the various factors, Barclay’s growth over the coming two years is likely to be driven by:
- Hedge-backed income: £18.3bn locked in through 2028, providing visibility but at lower rates than 2024–25.
- Investors willing to pay 1.3-1.5 times asset value (if RoTE maintains the 14% target).
- Continued share buybacks (recently completed £1bn).
Even with these growth drivers, earnings per share (EPS) is likely to only enjoy 5%-7% gains, as opposed to the 10%-12% seen back then.
Of course, if Barclays’ trading division keeps pulling in record revenues, the stock could outperform. But this would be an outlier event, rather than a likelihood.
Reasonable growth scenarios (2026–2028):
| Scenario | CAGR | Total return (2.5 yrs) | Key assumptions |
|---|---|---|---|
| Conservative | 10% | ~27% | RoTE 13%–14%, credit normalises, multiple flat at 1.3x |
| Base case | 15% | ~42% | RoTE 14%+, hedge delivers, buybacks continue, multiple to 1.4x |
| Optimistic | 20% | ~58% | Investment bank outperforms, RoTE over 15%, multiple to 1.5x+ |
That makes the current story more about shareholder returns than price growth.
Dividend comparison
From an income perspective, Barclays offers better coverage than other banks, with payouts only accounting for 23% of earnings.
| Metric | Barclays | Lloyds | NatWest |
|---|---|---|---|
| Current dividend yield | 2.9% | 5.2% | 5% |
| 2026 dividend growth forecast | 57% | 17% | 15% |
| Payout ratio | 23% | 48% | 48% |
| Dividend cover (x earnings) | 4.35x | 2.1x | 2.09x |
| Forward yield (2027) | 4.5% | 6.5% | 5.5% |
That leaves ample room for growth even if profits dip — especially if earnings grow while buybacks reduce the share count.
The bottom line
Barclays now looks more well-positioned as a stable income stock with dividend growth potential. Although its yield is low at around 2.9%, it has £15bn earmarked for shareholders over 2026–2028.
But from a capital growth viewpoint, most of the gains are likely already priced-in. For investors hunting 200% gains, there are better options on the FTSE 100.
For income investors, though, Barclays story might just be getting started — and that deserves a closer look.
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Mark Hartley owns shares in Lloyds Banking Group and HSBC.
