Proactive Investors - Barclays PLC (LON:BARC) could be poised to deliver higher-than-expected revenue on stronger credit card and net interest income margins, Jefferies analysts believe.
“Increased management attention could have important ramifications,” Jefferies said in a note, highlighting Barclays' plans to add £30 billion of risk-weighted assets to its UK operations.
This comes after “heightened risk aversion” in the wake of Brexit, prompting a dip in Barclaycard UK’s market share to 15% in 2023 from 24% in 2019.
Barclays UK, UK corporate and private & wealth management collectively generated a 20% return on tangible equity in 2022 and 2023, Jefferies noted, marking the bank’s second-largest source of income.
“Thus, the marginal capital allocated comes at rates of return higher than the group level,” analysts said.
Jefferies laid out forecasts for higher capital return than Barclays' own estimates through 2026, driven by Barclaycard, of £11.1 billion against £10 billion anticipated by the bank.
“There could be some scope for positive surprise around Barclays £6.1 billion UK net interest income guide for this year,” analysts added.
“Near-term net interest margin performance has shown a rising trajectory as deposit mix shift has been less pronounced and swap rates have been higher.”
Jefferied forecast the figure to sit at £6.24 billion as a result.
A ‘buy’ rating was reiterated, while Jefferies also bumped up Barclays’ share price target from 330.00p to 335.00p, against Tuesday’s close of 217.55p.