Litigation, Impairments Dent Barclays' Profit Result; Shares Remain Buoyant

Tom Burroughes

23 October 2025

has reported a 7 per cent year-over-year drop in profit attributable to shareholders for the third quarter of 2025, with a spike in litigation and conduct costs and a sharp rise in credit impairment charges affecting the bottom line.

Attributable profit was £1.457 billion ($1.94 billion) in Q3 2025, the London-listed bank said in a statement yesterday.

The bank and its subsidiary, Clydesdale Financial Services Ltd (CFSL), have increased the provision to handle remediation of motor finance commission payments to £325 million from £90 million. The UK financial services sector – as seen in the case of UK-listed consultation paper… the FCA's proposed approach to customer engagement, and the likelihood of a higher-than-anticipated level of customer redress reflecting the FCA's proposed methodology for the calculation of redress, which is less closely linked to actual customer loss (if any) than previously anticipated,” Barclays said.

The bank ceased lending in the motor finance market in late 2019, and its estimates follow the FCA proposal that historical operations from April 2007 fall within the scope of the FCA redress scheme.

Separately, credit impairment charges in the quarter rose to £632 million, surging by 69 per cent on a year earlier. Barclays noted an increase in credit impairment charges partly due to the "day one" impact of acquiring Tesco Bank and the GM credit card portfolio. In October, Barclays incurred a £110 million charge related to the US subprime auto lender Tricolor, which filed for bankruptcy.

Notwithstanding such impacts, it appears that shareholders like the Barclays direction of travel. Its shares have risen 42.3 per cent since January; they rose about 4.3 per cent as of 10:30 local UK time yesterday, at 379.8 pence per share.

Barclays Private Bank and Wealth Management
At the wealth and private banking arm, Barclays said its attributable profit fell 3 per cent to £256 million; net interest income rose 1 per cent to £597 million; net fee, commission and other income rose 6 per cent. Operating costs rose 9 per cent, to £715 million.

The cost/income ratio of this division widened to 73 per cent from 68 per cent; return on average allocated tangible equity dipped to 26.4 per cent from 29 per cent.

Total assets under management rose to £51.3 billion at the end of September this year, up from £45.8 billion a year earlier; assets under supervision stood at £84.4 billion, up from £76.6 billion, it said.

Other results
Profit before impairment in Q3 2025 rose 4 per cent year-on-year to £9.09 billion. Total income rose 9 per cent to £22.063 billion; operating costs rose 8 per cent to £3.954 billion in the quarter. Its CET 1 ratio was 14.1 per cent at the end of September.

"I continue to be pleased with the ongoing momentum of Barclays' financial performance over the last seven quarters,” C S Venkatakrishnan, group CEO, said.

“We delivered return on tangible equity of 10.6 per cent in Q3 25 and 12.3 per cent year-to-date. We are therefore upgrading our 2025 RoTE guidance to greater than 11 per cent and reaffirming our 2026 target of greater than 12 per cent. This is driven by a stronger outlook for stable income and an earlier-than-planned delivery of efficiency savings. Moreover, it comes despite an additional charge for motor finance redress,” he said.

The bank said it intended to bring forward some of its full-year distributions to shareholders and announced a £500 million share buyback yesterday; it intends to move to quarterly buyback announcements.