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FTSE 100 financial institution Barclays (LSE: BARC) has put in a rip-roaring efficiency over the previous few years. The Barclays share value has moved up a formidable 186% over the previous 5 years.
Now, that could be a considerably uncommon timeframe within the sense that the baseline is low. 5 years in the past, the nation was nonetheless within the midst of the pandemic and its long-term affect on banks’ profitability was a query for debate.
Nonetheless, there’s extra to the robust Barclays share value efficiency than only a low baseline. Prior to now yr alone, it has moved up by 57%. What’s going on right here – and may it nonetheless make sense for me to speculate now?
The unfold of Barclays’ enterprise is each a blessing and a curse on the subject of monetary efficiency. It’s a blessing as a result of the financial institution’s giant world funding banking division may also help it make earnings even when a weak British economic system proves difficult for native retail banking rivals reminiscent of Lloyds and NatWest.
However it’s a curse as a result of it implies that even strong efficiency in its personal UK retail financial institution will be missed by buyers if they’re frightened about Barclays’ worldwide funding banking efficiency.
The previous yr has proven the power of the method, for my part. The 57% rise within the Barclays share value is nearly the identical as NatWest’s 58% and handily beats the 40% development in Lloyds’ shares over the identical interval.
I believe that’s as a result of a comparatively benign financial outlook within the UK has lifted Metropolis confidence in all of those companies’ UK retail banking operations.
In the meantime, the identical is true for Barclays’ funding banking arm. International markets have up to now been surprisingly resilient within the face of uncertainty about US tariffs, geopolitics and worldwide financial development prospects.
What comes subsequent stays to be seen
The factor that issues me as an investor is that I reckon these dangers haven’t gone away. Simply because the worldwide financial efficiency up to now in 2025 has been higher than some analysts feared doesn’t imply the underlying dangers have disappeared.
The truth is, I’ve seen some warning indicators in latest weeks that concern me on this rating, from the US planning to boost its already monumental debt burden to year-on-year UK home value falls over the previous couple of months. The precise particulars range relying on how totally different units of statistics are interpreted, however the temper music has been shifting, so far as I’m involved.
Does this really feel like we’re on the cusp of a golden period of financial development, both internationally or right here within the UK? I’ve doubts – and they’re getting stronger.
I might be flawed. Barclays has a big buyer base, robust manufacturers, is vastly worthwhile and has navigated all method of monetary crises by its lengthy historical past. So it might be that the present Barclays share price-to-earnings ratio of 9 nonetheless affords a long-term cut price.
The dangers are unnerving me although, as they might result in greater mortgage defaults and weaker earnings for banks. That issues me to the purpose that I don’t plan to purchase any financial institution shares within the close to future. That features Barclays.
