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Welcome to Barclays Q3 2026 Results Analyst and Investor Conference Call. I will now hand over to C.S. Venkatakrishnan, Group Chief Executive, before I hand over to Anna Cross, Group Finance Director.

Good morning, and thank you for joining the Barclays results call for the third quarter of 2026. In this call and in our full year results discussion in February 2027, we will supplement our usual discussion with two features. First, we will explain the benefits of the investments which we have made to date and which are delivering the results that we expected. And second, we will provide greater insight into the components of our cost profile and trajectory. This will illustrate the operational efficiency, which we are driving for, particularly from technology, and it will show our future ambitions.

I will commence with a brief review of results, followed by a detailed discussion from Anna and then return to these 2 features. I'm pleased with our year-to-date performance, and I'm confident in achieving our primary financial targets. Our income in the third quarter was GBP 7.4 billion, up 3% year-on-year, and we reduced the cost/income ratio to 62% for the quarter and 57% year-to-date. We grew profit before tax in the quarter by 12% to GBP 2.3 billion, and we delivered an RoTE of 11.7% in the quarter and 13.8% year-to-date.

Given our returns and a robust CET1 ratio of 14.2%, we are announcing a GBP 500 million share buyback. This brings year-to-date distributions to GBP 2.8 billion, up 47% from the same period last year. Our earnings per share is up 18% year-on-year for the third quarter and on track for a third consecutive year of 20% growth in EPS. We remain very confident in achieving the group RoTE target of greater than 12% this year, having achieved 12.4% in the last 12 months.

Let me share four main reflections on this quarter. First, the investment that we have made in and the repositioning of our U.K. Retail and Corporate franchises is driving above-market growth. All three businesses had an RoTE of greater than 20% in the third quarter. Second, I'm pleased to see the continued results of our investment in the equity franchise in the Investment Bank. Their strong revenues this quarter have helped balance the somewhat disappointing results from fixed income intermediation. Third, increased regulatory clarity is providing us with greater capital flexibility and we will update on our expected CET1 operating level at the full year results. Finally, as I will discuss later, multiyear investments in our businesses are delivering consistent returns and growth. This is the outflow we are creating. Including these investments, we are going to provide you with a clear path for absolute cost and efficiency savings in 2027. I will return to this at the end.

First, however, Anna I will take you through the financials in detail. Over to you, Anna.

Thank you, Venkat, and good morning, everyone. With one quarter left in the original 3-year plan, we are confident in delivering all group targets. As I take you through our results, I will focus more than usual on costs. Starting though, with income.

Group income grew 3% year-on-year in Q3, on track for the circa [ GBP 31.5 billion ] target in '26. This implies full year circa 8% and versus the more than 5% CAGR target to '28. We are building more consistent returns by growing stable income dreams. These now cover 125% of group costs versus around 100% before '24, having grown for sixth consecutive years. This is underpinned by group NII, which has been around 50% of total income consistently since 2023.

We are confident in delivering the '26 group NII targets with 7% year-on-year growth in Q3, and we expect NII growth to continue underpinned by two levers. First, the quality of deposits, particularly in the U.K., these support structural hedge income growth until at least 2030, as I'll discuss later. And second, ongoing lending momentum, starting with U.K. deposits. Around 80% of group deposits on from the U.K. clients, including in Private Bank and Wealth Management and the International Corporate Bank. We bring these together for the first time on the left, with total deposits up 3% year-on-year.

Barclays U.K. retail deposits also grew 3%, as shown on the top right. Current account customers hold around 90% of Barclays branded U.K. retail deposits with current account balances stable since '24, as we show on Slide 37 in the appendix. Given our strong funding position, we take a relationship-led approach to savings with Premier accounting for 90% of Barclays [indiscernible] ISA growth year-to-date. But retail deposits are only one part of the story. The bottom right now shows the corresponding spread of the U.K. Corporate deposits.

We are the U.K.'s largest core bank with GBP 220 billion of deposits across three divisions: Barclays U.K., U.K. Corporate Bank and RCB in the Investment Bank. These have grown 4% year-on-year. Current accounts are stable to support deep relationships with around 80% of U.K. Corporate Bank clients banking with us for more than 5 years. [indiscernible]

Shown on the next slide. The structural hedge provides stable income and predictable growth for all divisions. Average swap rates of 4.2% year-to-date exceeds a 3.5% planning assumption supporting additional NII in future years. Given prevailing and expected swap rates, hedge income is likely to grow until at least 2030, as you can see from the updated maturing yield disclosure on the left. Whilst higher rates undoubtedly helped structural hedge income we are also diversifying NII by growing lending.

Total U.K. lending grew by 7%, consistent with a more than 5% target from '25 to '28. One quarter to go, we have deployed GBP 28 billion of U.K. business growth RWAs towards the circa GBP 30 billion target for the three years to '26. Mortgages grew by 7% year-on-year, with GBP 11 billion of gross lending in the quarter. Corporate and Business Banking lending grew 13% year-on-year, excluding the runoff portfolio. Above-market growth in U.K. Corporate Bank reflects investments since '23, helping to attract 1,500 new clients with around 40% borrowing from us. More or less from Venkat later.

In summary, our progress in both deposits and lending is driven and sustained by investment in the business in both service and capabilities. Moving on to costs. When we think about costs, we distinguish running the bank from investing in the future. In running the bank, we aim to drive as much operational leverage as possible by delivering gross efficiencies to offset costs from business growth, inflation and BAU investments. We distinguish this from strategic investments to increase returns. Run-the-bank costs have increased by GBP 0.3 billion, of which GBP 0.2 billion relates to the acquisition of [indiscernible]. Put differently, gross efficiencies have meaningfully offset additional costs through business growth, installation and BAU investments.

This is despite GBP 0.3 billion of additional performance costs, given 8% year-to-date income growth in the Investment Bank versus the low single-digit target. We also increased investment by GBP 0.2 billion year-on-year to harmonize systems and processes and growing fee businesses. This results in exit rate costs of circa GBP 18 billion for '26.

As outlined last quarter, we are also deliberately spending an additional GBP 0.3 billion in half 2 to structurally reduce costs supported by technology deployment. Inclusive of this, the Q1 [indiscernible] division and the change to material risk takers compensation mix, we expect circa GBP 18.5 billion of costs in '26. This is consistent with the high 50s cost income ratio target.

We said in February that costs would grow modestly from '25 to '28, and the group would deliver positive operating jaws each year. These expectations are fully intact based on statutory total costs. So what drives this? For the group, we expect run about costs to be flat or lower in 2027 versus '26, a reflecting higher anticipated growth efficiencies. This creates capacity for GBP 0.4 billion of planned additional investment within our modest cost growth guidance. In absolute terms, we expect statutory costs to fall to circa GBP 18.4 billion in '27. Cost/income ratio remains on North Star, so we would expect to flex business growth costs to the extent that income is higher or lower than expectations.

As a result, we are confident in making meaningful progress next year towards the low 50s cost income ratio target in 2028 from high 50s ratio this year. Our confidence in delivering these commitments is underpinned by the generation of cost efficiencies. In the past two years, we have delivered around GBP 0.7 billion of gross efficiency savings annually facilitated by GBP 0.3 billion of SCA in the prior year, driving positive operating jaws each year. This was our planning assumption for '26 to '28.

Having increased this for '26 alone, we expect more than GBP 1.1 billion of gross efficiency savings in '27. These actions involve an expected reduction of circa 5,000 full-time employees. Around 60% of the group actions relates to support functions, including fewer developers as AI makes our people more productive. Nowhere in the bank, is this more relevant than in Barclays U.K., where we have taken more structural cost actions than planned in '26. Whilst this acceleration means I no longer expect Barclays U.K. cost to fall in '26 versus '25, we are more confident in reducing 2027 and 2028 below the '25 level. This is enabled by improved customer-facing technology, which has reduced call center volumes by 10% in last year.

While technology improvements within call centers have increased colleague productivity. Changes to the branch starting model have also reduced employees per branch by around 10% in the past year with colleagues focusing on higher value support. And following the successful integration of Tesco Bank, circa GBP 0.2 billion of cost synergies are flowing through with the majority split broadly evenly between '27 and '28.

In '27, we expect a high 40s cost-to-income ratio before falling to mid-40s in '28. Turning to impairment. Consumer and corporate balance sheets remain robust and borrowers are behaving rationally with a year-to-date loan loss rate of 55 basis points. The Barclays U.K. loan loss rate of 20 basis points benefited from a Tesco Bank debt sale and should normalize towards circa 30 basis points in Q4. Whilst in U.S. Consumer Bank, 90-day delinquencies fell further as shown on appendix Slide 45.

We expect a seasonally higher reserve build and loan loss rate in Q4 given card spending. Given this, on a 552 basis points year-to-date loan loss rates, we still expect circa 550 basis points for the full year. Turning to Barclays U.K. RoTE was 21.2% in Q3 and income grew by 4%. Costs increased 6%, driven entirely by GBP 110 million of SCA reflecting the accelerated actions I discussed earlier. NII increased 6% year-on-year and 4% versus Q2 to GBP 2.1 billion.

Structural hedge momentum was complemented by positive product margin effects as guided Q2. This reflected dissipating mortgage margin headwinds, card seasonality and day count. We still expect full year NII around the middle of the GBP 8.1 billion to GBP 8.3 billion range as guided last quarter. An increase in the structural hedge in early October will lead to a negative Q4 product margin movement, offset by higher hedging with no material less effect.

Moving to U.K. Corporate Bank. Q3 RoTE was 23.5% and 21.6% year-to-date. Income and costs both increased 10%. We grew NII by 14%, driven by structural hedge income and volume growth. As outlined earlier, lending grew by 14% and deposits by 1%, supported by improved propositions. And the loan-to-deposit ratio was 38%, up 4 percentage points year-on-year.

Moving to Private Bank and Wealth Management. RoTE was 23.8% and 25.4% year-to-date. Client assets and liabilities grew 6% year-on-year and AUM 10%. This included GBP 2.5 billion of net new AUM year-to-date, including GBP 0.6 billion in Q3. The Private Bank has driven most of the client asset and liability growth in the past 3 years. Part of the investment I outlined earlier will drive additional scale in U.K. Wealth, including through adviser recruitment and recently launched marketing. These investments increased costs 7% quarter-on-quarter, and we expect a similar increase into Q4.

Moving to the Investment Bank. Q3 RoTE was 9.5% and 13.5% year-to-date. Income was broadly flat year-on-year with higher RWAs reducing income to average RWAs by 20 basis points to 6.1%. With the Investment Banking loan book review now largely complete, we deployed additional RWAs to support deal activity, including in the U.K. This will generate income in future quarters. Costs increased GBP 72 million, driven entirely by GBP 112 million of FCAs and changes to material risk takers compensation mix. We expect Q4 MRT costs to be similar to the Q3 level of GBP 55 million. Including all H2 costs, we remain focused on delivering a 12% RoTE and positive operating jaws in '26, having delivered 2% positive jaws year-to-date.

In U.S. dollar terms, markets income increased 4% year-on-year. Benefiting from past investments, equities increased 47% and accounted for half of Q3 markets income. Equity derivatives were particularly strong, and we grew prime, supporting 8% year-on-year financing growth. This offset weaker FICC intermediation with lower line activity in rates and credit in the second half of the quarter and further adversity in September given macro movements. Investment Banking fees increased 2%. Strong activity in advisory and ECM offset lower DCM fees, reflecting deliberate risk and return decisions in a smaller, less in wallet.

M&A and ECM pipelines remain strong. Lower ICB income reflected GBP 39 million of less than marks and higher hedging costs in the Corporate Lending line. Transaction Banking income grew 9% year-on-year, reflecting deposit and fee growth, particularly from trade and working capital.

Moving to U.S. Consumer Bank. RoTE was 10.9% and 19.9% year-to-date. Income decreased 1% with the Q2 American Airlines portfolio exit broadly offset by Best Egg and business growth. NII increased 3% year-on-year with a lower average balances more than offset by higher NIM. This reflected mix effects and a circa 10 basis points one-off benefit from a change in the recognition of future customer rewards. Higher interest rates do not materially affect NIM as assets typically reprice within the month.

Cards and consumer loan volumes were as expected, there were higher benchmark rates continue to weigh on market-wide pricing of consumer loans distributed through Best Egg. This created a circa GBP 20 million non-NII headwind in the quarter. Costs increased 14%, reflecting a full quarter of Best Egg costs and the cost/income ratio was 50%. We still expect a circa 12% RoTE in '26, excluding the AA gain on sale.

Let me step back from the quarterly performance. In the past three years, we have been transforming into a multiproduct digital-only, U.S. Consumer Bank with 33 million customers. The partnership cards franchise remains at its core. Balances grew 6% organically in the past year as we rebalance towards retail to improve diversification and risk-adjusted margins. This includes circa 20% growth in General Motors balances since August '25. The fully digital consumer deposit franchise shown in the middle has grown balances by 53% since '23 to $26.6 billion. These deposits are around 50 to 60 basis points cheaper than wholesale funding and now comprise 84% of total funding.

Most recently, Best Egg has added consumer lending capabilities with circa $7 billion of annual originations. This allows us to deliver even more value to partnership clients and their customers over time. Bringing these propositions together will drive significant further growth in our most digital division. Our earnings momentum is driving consistently stronger capital generation. We are on track to generate around 200 basis points of capital this year, I expect more than 230 basis points in '28. This supports progressive shareholder distributions, including the GBP 2 billion plan dividend for '26, we have now announced GBP 10.7 billion of distributions since the start of the plan, even before any Q4 buyback.

We take a prudent approach to both current and future regulatory requirements regardless of materiality. Noting recent commentary on our TRS exposure on Private Credit Loans, our approach here is no exception. The conditions to classify the treatment as trading book were met and our approach, supported by appropriate governance internally and external review. And this approach is unchanged under Basel III rules.

For context, the mark-to-market of this exposure is small, currently around GBP 300 million within the GBP 15 billion Private Credit book and is equivalent to GBP 1.5 billion of notional.

Looking ahead, our plan and targets are based on operating around the top of our 13% to 14% CET1 ratio, while fully absorbing RWA headwinds in '27. Put differently, the plan did not assume a reduction in Pillar 2A requirements. As expected, Basel 3.1 will increase RWAs by GBP 8 billion to GBP 15 billion, equivalent to 30 to 55 basis points of CET1. We now have greater clarity on Pillar 2A which will reduce the MDA by 59 basis points, more than offsetting the impact of higher RWAs. This gives greater capital flexibility and we will update on the expected CET1 operating level within the 13% to 14% range at full year results.

Bringing this all together, we are delivering consistent revenue growth and amplifying this with positive operating leverage. This has driven the majority of the double-digit EPS growth in '24 and '25 and year-to-date. In doing so, we are driving more consistent shareholder returns. Buybacks of GBP 5.8 billion since 2023 and have reduced the share count by 12%. Further compounding EPS growth and delivering growth in TNAV and dividends of 32%. But the plan does not end here.

Before we open for Q&A, let me hand back to Venkat.

Thank you, Anna. Two years ago, we presented a vision anchored and measured ambition and disciplined delivery. And as I told you in February this year and as Anna has tried to show you today, our operational performance and our financial success are two sides of the same coin. With one quarter to go until the end of the original 3-year plan, I'm very pleased to say that we have met or are positioned to achieve all of our primary group objectives.

I want to illustrate that with examples across our businesses and then discuss the next stage of our execution ambition. This is to reduce our cost structure and increase operational efficiency. Let me remind you of our U.K. Retail strategy, a journey on which we have been and the opportunity from here. This strategy has two pillars: First, we have repositioned the business into a multi-brand franchise, extending our client reach and the ability to trailer services to different customer needs. We acquired Tesco Bank in 2024 and it now accounts for 20% of card acquisitions and is a key lever in our deposit strategy.

We acquired Kensington Mortgages in 2023. The Kensington brand and capabilities enable us to lend to more complex borrowers and balances here have more than tripled since the acquisition, and we are delivering a better client experience by investing in technology. This includes our mortgage Turka platform, where we have reduced application times from 45 minutes to less than 15, meaningfully improving our broker NPS score from minus 51 to plus 70. As a result, our market share is up 30 basis points since 2023 to 10.4%.

The second pillar of our retail strategy is to establish Barclays as the premier U.K. Bank. Improved customer service has culminated in Barclays having the highest premier NPS among U.K. peers. As a result, since the end of 2023, we have increased premier mass affluent customers by 27%, driving 23% deposit growth in this segment. In doing so, we have shifted our deposit mix towards customers with larger balances and with the greatest need for long-term investment planning. We have the customers, including circa 400,000 in Barclays U.K. that could benefit from [indiscernible]. And we now have the most compelling, low-priced, high-quality proposition in Private Bank and Wealth Management in the U.K.

These provide financial advice with no upfront fee and direct investing our investment platform with no custody fees. When it comes to U.K. Corporates, we are uniquely placed to drive growth and investment. We have built the largest U.K. Corporate Deposit franchise by investing in transaction banking and having complete client coverage. This starts with Business Banking in Barclays U.K. through to FTSE 350 class in the U.K. Corporate Bank. And as the only full-service U.K. Investment Bank, we also serve the very largest FTSE clients in the international corporate bank.

The U.K. Corporate franchise has historically been the beating heart of Barclays, but it has lacked specific attention for some time. This changed after we resegmented the business at the end of 2023, gave it capital and started reinvesting in technology. We are driving differentiated growth on both sides of the balance sheet, with lending growing materially faster than the market since 2024, driven by new and existing clients. With a loan-to-deposit ratio of only 38% in the U.K. Corporate Bank versus 50% to 75% of peers, we have much further to go.

We are driving growth by delivering a better client experience. Around 45% of our clients now use iPortal, our digital access platform exclusively, replacing five legacy platforms, and we expect this usage to rise to 100% by the end of this year. All of this will drive greater product usage, supporting our fee income and allow us to decommission legacy tech platforms.

In the Investment Bank, we are improving the returns footprint by altering the business mix and increasing productivity. Within a broadly stable RWA footprint, we have increased income to average RWAs by 130 basis points since 2023, to now standing at 6.8% in the last 12 months. Ours is a story of discipline, focused on greater client relevance, where we now rank top 5 with 66 of our top 100 market clients, up from 30 in 2021.

And to remind you, our target was for 70 out of the top 100 to be top 5 by the end of this year. We have driven structurally stronger, more predictable global markets income in two ways: first, by growing the stable base; and second, by reducing volatility and the seasonality of the intermediation business. We have increased finance income by about GBP 1 billion since 2023, reflecting the investments which we have made in liquid financing where we now rank 5th globally. This creates deeper relationships with 98 of our top 100 market clients choosing Barclays for their financing needs. And we are rebalancing towards equities which now account for 45% of the year-to-date revenues in the markets business versus 32% in 2023.

Equity derivatives and Prime have driven about 90% of this growth. The diversification of our revenue supports performance in a broader range of environments, with Q3 being a case in point where we saw a 50-50 split in revenues between equities and fixed income. We are improving performance across our businesses through disciplined delivery and rigorous execution. We have done so by investing in and building a constellation of segment-leading businesses.

These include consumer businesses with over 40 million retail customers globally, the largest U.K. Corporate Bank by deposits and a top-tier global investment bank. As we move from the first 3-year plan to the second, we are also transitioning to the next phase of our journey. And this is to accelerate operational improvements and drive even greater cost efficiency, through deep technological transformation, reducing the unit cost of product manufacturing, service and innovation.

We are achieving this by standardizing our data, modernizing our infrastructure and harmonizing our processes. And we will employ AI at scale where AI is the icing on the cake, not the cake. Investments underpinning this is within the plan we have outlined in February and is being made possible by our operating leverage. By continuing to execute our strategy with discipline and rigor, we are accelerating our ambition and securing structurally higher and all weather returns beyond 2028.

Segment leading businesses, ambitious revenue growth robust cost and operational efficiency, conservative capital and liquidity profiles, rigorous risk management and strong capital generation. These are the principles and goals by which we aim to live and prosper at Barclays. I'm now open to questions and answers.

[Operator Instructions] Our first question for today comes from Jonathan Pierce of Jefferies.

I've got two questions, one on capital, one on costs, please. On capital, the Pillar 2A drop 59 bps in equity terms, things about 105 basis points in total capital turns. It's it's huge, [indiscernible], it's equivalent to about GBP 50 billion of RWAs moving into Pillar 1, not the 8 to 15 that you're flagging for Basel 3.1. So I just think we're a bit after on this. Is there something else going on here? Is this actually part of a much broader review of Pillar 2A and not just Basel 3.1?

And maybe as a supplementary to that, if you do land at 11.6%, which is what we're saying in the slides this morning, it's very similar to where Lloyd's and NatWest are at the moment and they're targeting a 13% equity Tier 1 ratio. So I know you're going to tell me we're got to wait for full year, but any insights into how you're thinking about this? Would you need to wait a little bit above or slightly higher buffer than those other two banks, maybe 13.5% would be helpful for some color on that, please.

Secondly, on costs, thanks so much for the absolute cost guidance for '27, I think that's really helpful. Afraid that I'm going to ask about 2028, and I'll keep it very simple. Are we still okay to rely on the bridge, the absolute cost bridge that you gave us with full year results 2025? So that's Slide 66 that gave us a cost number in effect for 2028. And if not, how should we think about '28? Is it another year of run the bank costs being broadly flat like in '27? And then the delta is investments? How should we think about '28 costs, please?

Okay, Jonathan, let me take both of those. So let me start with Pillar 2A. What we're saying is that we're expecting a reduction in our NDA of 59 basis points. And essentially where this comes from is we have an annual process around Pillar 2A. That includes Basel, but it will include other things. So you're right to say that the Basel component is part of it, but that is an annual normal process and is an ongoing piece of work.

The second thing I would say is that Basel is a big, complex change. And so you have some quite mechanical offsets and then you have some that are sort of a lot more complex than that. So I think it reflects both of those factors, Jonathan. So quite difficult to read from the outside. But as I step back from it, what it tells me is that we are well capitalized now in Pillar 2A for the capital environment that we're going to go into, number one.

And number two, it gives us more capital flexibility as we go forward in the plan because we had not anticipated this Pillar 2 reduction. The other thing that I would say in response to your question. I mean, obviously, we will talk about the range within which we expect to operate at the full year but you should expect us to operate an appropriate buffer to the MDA as we do now. So don't expect that to change.

To go to your second question, what we said at full year remains intact. Specifically, that you should expect modest cost growth, and you should expect positive jaws. What we're trying to highlight for you today is that in this phase of the plan, there is an increased intensity of investment. But we are also highlighting an increased efficiency so that efficiency is up commensurately so that we can contain costs and make those two things true. So that's how we think about it.

Venkat, anything you want to add?

Let me add on both. First of all, on capital. I think as we've made clear, we've been in our planning up to now we had taken into account what we thought would be the increases coming from the Basel process. That's due to us in early January. And that's, as we said, 30 to 55 basis points. We had not in our planning process, as Anna just said, taken into account for this adjustment offset would be negative. So of course, net-net, this is a tailwind, as you point out.

And then on the efficiency side, just to add context to Anna's answer, what I would say is, we have been investing in technology, we continue deeply to invest in technology, simplifying our processes, modernizing our infrastructure. And I would expect this to give results over time. And as we have clarity on it, we'll work with you.

Thank you, Jonathan. Can we have the next question, please?

Our next question comes from Alvaro Serrano of Morgan Sanley.

First one is on the Investment Bank. Obviously, you've called out, I think Venkat somewhat disappointing things the word you used. And you've also explained that the intermediation sort of activity was slower in the second half of the quarter. Is there something you could sort of help us when we think about going forward, is there any sort of particularly sort of bad sort of, I don't know, marks in the quarter that should bounce back? Or is it a reasonable run rate obviously, considering seasonality from here, maybe a bit of color on that sort of in particular big number, but maybe broader IB activity.

And related to that, Anna, you mentioned that you were -- I can't remember the word you used, that you were leaning a bit more with clients and increasing the other ways to take over -- take advantage of opportunities. Is that going forward, would you be more open to give the division a bit more balance sheet and RWA growth?

Yes. Alvaro, thank you. Look, there's nothing in particular to call out. I think this was one of those quarters where in parts of fixed income in rates -- European rates, particularly and parts of credit, the intermediation was just a little weaker. We still think we've got a very good strong client franchise. We see that in the engagement in the numbers. It was just one of those things were just sort of weaker for a period. So nothing particular to call out.

I mean, of course, we are giving this attention to try to understand what -- how to improve it. I would say also -- there are other parts of fixed income [indiscernible] products in which we've been investing a lot, which have done very well. So this is not a general fixed income story. It's parts of it. Our franchise continues to be strong, and we will do better. Anna?

Yes. Let me just add to that before I go into RWAs. So I completely agree with Venkat. The things I would add is what we're really pleased with, Alvaro is the areas that we've been investing in have done really well. So if you look at our performance in equities, if you look at our performance in M&A, if you look at our performance in ECM, they have benched very well with the U.S. peer group. And that would not always have been the case, and it's really reflective of the investments that we've made. And I think that diversification of income, particularly as we look forward into the fourth quarter is important.

As to the leaning on clients, I mean, the RWAs in the Investment Bank have been broadly flat since 2022, actually well before the plan that we're about to complete started even. And they've moved between about [ 195 and about 205 ]. The thing that we called out that's perhaps a little bit different is we are nearing the end of the 3-year review of our Investment Banking Loan portfolio. So you are seeing us lean in a little bit more there in terms of U.K. Lending. And whilst outside of our target, that's completely consistent with our view of the U.K. So that's the only thing I would specifically call out are -- but thank you for the question.

Yes. And Alvaro, if I may, just sort of to pick up where and I left off. When you look -- now we're 11 quarters into this 3-year plan and you look at the Investment Bank, it has delivered exactly what we wanted it to deliver, outperforming in some respects. And puts us in a very good position. I mean, go back 11 quarters, we said we do three things. We said we increase the revenues in the Investment Bank. We keep capital flat, which Anna has just said, we've done for 5 years, and we improved profitability. And nobody thought we could do all three. And here we are, profitability approaching group levels at RoTE, revenues have gone up.

The areas in which we've invested in, as Anna has said, equity capital markets, M&A and equities generally in financing, the structural improvements in stable revenue streams and in financing return per unit RWA. All of that has worked and we continue to maintain our ranks in spite of others investing more. And the overall thing about RWA or capital in the Investment Bank is we've always said it's a proportional game, right? And that proportion is infected in part by what we do the IB and part by what happens elsewhere. But in the IB, we stuck to our guns, GBP 200 billion of RWAs has been the average over 5 years, and the variation has been minimal, GBP 5 billion this way or that way. So this is playing out as advertised as desired, and it puts us in a good spot continuing forward.

Our next question comes from Chris Cant of Autonomous.

I just wanted to come back on capital, please. Appreciating that the greater than GBP 15 billion capital return guidance you gave at full year '26 was open ended. But I do think that was an area that somewhat disappointed the market in terms of the relative level of ambition on capital return versus the plan for '24 to '26. Given that you've been able to accelerate our investment plans because of the revenue surprises this year. So you're getting done what you hope to get done but more rapidly.

And given that you've now got confirmation on Pillar 2, which I think, was foreseeable in terms of quantum, but it's not something you had banked in the plan. Now you can bank that. Will you consider revisiting that greater than GBP 15 billion capital return aspiration? Because I think the reason you left it open ended was you wanted to leave Slack in the plan for either potential M&A or potential accelerations in your investment plans.

But in terms of M&A, given performance of the shares year-to-date, your acquisition currency may be a bit softer than you would like, I would assume. And in terms of the investment you've already been able to accelerate that. So is that something you'll consider revisiting alongside reconsidering the 13% to 14% range?

So thanks, Chris, for the question. So let me just recap on what we said at full year '25. The first was that we were planning at the top end of our range. because we had clarity on Pillar 1, but we didn't have clarity on Pillar 2 and other regulatory changes, like, for example, IRB. We are clearly in a different position now. So we do have that Pillar 2 clarity. We're very keen to get through Basel 3.1 implementation at the end of the year before we give further consideration to this point with you.

The second thing that we called out was that we were very clear that if you took the capital generation in the plan, and the investments and the distributions in the plan, the capital generation was clearly bigger than the other two. And we said very deliberately that, that gave us flex in order to either return that excess to shareholders or alternatively invest it in the business, but that was a very, very high bar.

Those -- that remains exactly the same. And our capital hierarchy is very clear, starts with regulatory follows with shareholder distributions, thirdly, investment in the business. So all of that remains as was the only new piece here is the Pillar 2A. So we will come back at the year-end, Chris, and we will talk about the range within which we operate. And you can see the focus that we have on returning capital to shareholders through the actions that we have taken, in distribution in this plan alone, but specifically in this year. I mean we're at [ 10.7% ] now, including the planned dividend that we have for the full year, and that's before we've done a full year buyback. So I'm not going to be pressed for an answer now, but we are clearly considering these matters, and we will come back to you.

Our next question comes from Guy Stebbings of BNP Paribas.

I want to come back on capital and costs, please. On capital, just in terms of Pillar 2, it's clearly very specific to the start of next year, where the RWA range is still a little bit wide. So I just wondering if you could maybe narrow that range at all or whether the fact that the Pillar 2A benefit is coming in a bit better than most anticipated, where that implies the RWA headwinds might be a little bit towards the upper end of that range at all?

And then on the costs, thanks for the new disclosure and guidance. I also want to come back on the 2028 costs. I mean, before Q2 and the extra structural cost actions concerns, I've been assuming a '28 cost number [ sub18.4 billion ]. I mean if we use Slide 9 and the sort of building bottom, 'm just trying to understand whether it's sort of realistic to assume that efficiencies can more than offset the business growth and investments from the GBP 18.4 billion we start from in '27, if you like?

Thank you, Guy. I'll take the first one, and I'll start on the second 1 and then invite Vinkat to add. So, we've given you a Pillar 1 range, if you like, an RWA range just because reflecting on what I said before, Basel 3.1 is a big and complex change. And that range reflects the degree of litigation that we will be able to implement as we go through that transition. It doesn't relate to any specific FRTB point or anything, it's more broadly an implementation range, given its complexity. So we are being cautious at this stage. That's why we're saying we will speak to you at the full year. So I wouldn't narrow that range for you at this point.

On your second point, recognizing 2028 costs, but also recognizing that consensus for 2028 is very wide. And what we would reiterate here is we do expect modest cost growth. We do expect the cost income ratio in 2028 to be in the low 50s. All of that remains intact. And what we're trying to help you here with is to understand that the way we are managing our cost is not by constraining investments, but by driving the operational efficiency of the bank in order to bring the run-the-bank cost down and create operating leverage. So that is our focus.

You should assume that, that is going to continue into 2028. Venkat?

Yes, absolutely. That is our focus. We think that the promise of technology and our implementation of the technology is being realized. We think more will be realized and we are going to drive hard at that realization. So know that there is a great ambition and focus and discipline to bring to costs and cost efficiency, what you have seen in other parts of this plan in the last three years, which is business growth, customer service, capital discipline, revenue growth.

Our next question comes from Rob Noble of Deutsche Bank.

Another one on capital, I'm afraid. So just the opposite question. The U.S. CB moving to IRB. I think you say there's only going to be a minimal Pillar 2A change there. Is that -- why is that one smaller than the offsetting benefit that you get from from Basel? Or is that something that could come down over time as well?

And then the leverage ratio as well. Should I expect the common equity Tier 1 component of the leverage ratio to come down? And could that potentially be binding you from going too low relative to 13%? And then lastly, just on the outlook with rates at the moment. Can you give us any color on what you think the rate curve will do the U.K. business specifically. I presume we shouldn't just reprice our hedges to higher rates. What do you think are the main potential offsets within the U.K. business from a higher rate environment?

Okay. Thanks, Rob. Look, in terms of capital and Pillar 2A with IRB. You might recall that in, I want to say, Q1 2025, the increase associated with this was about 0.1 of NDA. So we do expect it to be more modest or modest. And the reason I say that is this is much more BAU. This is much -- we're used to implementing these models. It's not the kind of big complex change that we see with Basel. So I definitely wouldn't scale them to try and get another Pillar 2A meaningful Pillar 2 offset here. That's certainly not what we are expecting. We might see something modest.

To be clear, we've got nothing in the plan. So hopefully, that's clear. So just on the U.K. and the rates curve okay. So I'm going to answer your question by going in a different direction to start with. So bear with me. I think the thing that is most prevalent in the market at the moment is obviously competition around deposits. And we think that, that comes not from the structural hedge directly, but it's actually coming from the fact that there has been strong lending in the sector, you see pay down of TFSME.

You also see some deposit takers who are not loan makers in this part of the sector. And what that's doing is putting a bit of funding pressure into this area, and that's manifesting in two ways. One is more covered bond issuance and the second is intense competition around term deposits. So that's what we believe is happening.

We would see that as being not transitory given what I've described. So what does it mean for us? Well, we're in a slightly different position because clearly, what we are doing here is we have a different funding reality. This business has a loan-to-deposit ratio of 90%. It has an LCR last time we reported it of about [ 167. ] So it has really good liquidity levels. but we will lean in because we are -- we see the relationship and the ongoing relationship of deposits being really important here. But that means we can be more selective, if you like, more disciplined. And of course, from our perspective, we have a very, very powerful structural hedge.

So what you are seeing at the moment is that we're able to balance these things in a few ways. So firstly, our focus on deposits is not just on term deposits. It's actually more broadly across the relationship. And you can see that in the growth in our premier current tickets. That's really important. Secondly, as we approach the fixed-term market, we're approaching it through the lens of relationships. So about 90% of our growth year-to-date in ISIS is from Premier. So we're being able to be very, very disciplined there.

And also, that's allowing us to balance the margin impact, if you like, on the business as a whole. And that's why you're seeing a broadly stable NIM, it's moving around a little bit, but we're being able to contain that point. So I wouldn't drop the upside and the structural hedge straight through to the bottom of your calculation, there will be some offsets here and it's coming from increased funding costs, which are prevalent across the industry. But for those banks who have more liquidity and who have that more powerful structural hedge, they will fare better in this environment.

Okay. Sorry. On the leverage ratio, I mean, not really is the easy answer to that question. Venkat's just reminding me before I go on to the next question. But, thank you Rob, can we have the next question, please?

Our next question comes from Perlie Mong of Bank of America.

So just picking up a little bit more on the U.K. maybe. So thank you for the color you've given just now. But if I look at Slide 6, it does look like this continued mix shift between the savings accounts and time deposits, and that's consistent with the sector data we have seen. And I think in the last few weeks and months, we have maybe seen more competitors coming in, [indiscernible] and resin and also NS&I may be stepping up a little bit more as well. So what are you seeing in terms of the front-end trend in terms of the deposit market? And I think you said that an increase in hedge in October would reduce the product margin next quarter. So what is the underlying product margin you're expecting excluding that effect? So that's number one.

And second question is on the U.S. CB. I think the higher benchmark rate is maybe a GBP 20 million headwind in non-NII. I suppose even if we were to add back, total income is still a little bit low where Q1 was. And I think at the time, you said that it was not wouldn't be a bad guide to use Q1 as a guide for the rest of the year. So what are the moving parts there? And how should we think about that line going forward?

Okay. Perlie, I'll take those. So what you see in Barclays U.K. is that clearly, there is growth in total deposits, but current accounts are absolutely flat and have been for some considerable time. And actually, there's a slide in the back of the deck. It's in the appendix that you can have a look at there. So I think what you're seeing is intense competition, as I've said, but you're also in terms of fixed term deposits, but somewhat churn within fixed-term deposits as opposed to migration out of current accounts. In terms of product margin, we are not guiding to NIM at all. And all we were calling out is that flight path of that chart is actually quite difficult to interpret because to the extent that we increase the size of the structural hedge, that means that, that income is coming out of product margin and going into the structural hedge bucket. That's the only thing we're warning you about net 0 impact on margin.

I would remind everybody, though, that particularly given the new disclosure that we've given you today, our deposit story is much broader than U.K., particularly across the U.K., and you can see that in the strength of our corporate deposits. And equally, you can see there the stability that we have in the underlying operational accounts or current accounts, if you like, within corporate. So very, very similar story there. An ongoing increase in deposits, but real stability in the core.

Your second question, which is about the roughly GBP 20 million headwind. I mean, what we said at the beginning of the year was we expected to build back by the end of the year to broadly the same sort of level as we saw in Q1. The only difference that we are calling out is in relation to the sold prices on Best Egg, everything else remains the same. So we've got good underlying organic growth in cards. They're growing at about 6%, exactly the same as we're seeing in the U.K., actually. Best Egg originations were GBP 2 billion in the quarter. We said it would be GBP 7 billion over the year. So all of that loan origination, the NIM is at 13.7%. Deposits are up by 15% year-on-year. So all of those factors are playing out exactly as we said.

And impairments are well-behaved.

And impairments are very well behaved, actually. I mean, they're flat despite the fact that AAA has left the platform, and we would have expected that to have about a 30 basis point impact. So the only thing we are calling out that is different, Perlie, is that GBP 20 million. So hopefully, that gives you a good guide.

Our next question comes from Chris Hallam of Goldman Sachs.

Within financing in the -- is it possible to provide the split of growth or of revenues between equities and FICC mentioned on Slide 29, I think it is that 90% of the equities growth year-to-date has come by Prime and derivates. Therefore, it seems as though fixed financing must have been particularly weak in Q3. And I'm wondering how much of that would have been the conditions you've lagged in late September versus a proactive decision, if at all, to reallocate capital between [indiscernible] equities? And then mindful of the group revenue target for this year, would you be able to tell us whether those conditions persisted into November and how we should think about fixed seasonality to trend in Q4 this year versus the typical pattern we can see from prior years?

The second question, the small box you have on Slide 10. I think that's probably one; of the clearest call-outs we've had in the sector on the tangible benefits of AI-enabled savings. And it feels like the opportunity set basically shifted higher probably between February and July, which partly explains the additional [indiscernible] so looking ahead, is the annual efficiency opportunity you see now in 2028 also greater than perhaps it was earlier this year?

Okay. Chris, I'm going to start, then I'm going to hand to Venkat and then I'll pick up on Slide 10, and I'm sure he'll have something to say as well. So just -- I mean, I think like most participants in the industry, most of the growth in financing has come from Prime. We've also seen a very a very strong performance in equity. So I wouldn't attribute all of the growth to Prime. This really isn't a capital matter. This is Prime and fixed income financing and leverage heavy not capital heavy. So capital would not be in consideration here.

Venkat, do you want to talk about it?

Yes. So Chris, I mean, the way I think about it, just is in to a couple of things. First of all, financing revenues grew because of relationships because that's really, really important. You have to get on somebody's financing platform. As we said, 98 of our top 100 clients have a financial relationship with us. Defining relationship is strong both in equity and in fixed income. We've been one of the top income financial years forever and ever. And we continue to retain that market position. So that's structural.

Capability, the relationship with the client and for us, differentiating is we look at it as one. So the client has one offering which they received from us as opposed to different sales people coming in with different offerings. Tax structure. Then cyclically or seasonally, what you get is what's happening in the equity market, what's happening in proportions of the equity market, over time, people have called out what's been happening in semiconductor stocks, what's been happening in Asian equities. And those are things that seasonally come up and down.

And in fixed income, it is levels of rates and types of spreads. And therefore, what are people trying to borrow and lend. So what I would expect coming into the fall, it's very hard to say. Equity market volatility can certainly cut both ways in terms of how people want to borrow. And I think in fixed income, what you've got is greater interest because of some greater spread [indiscernible] than you've seen in a long, long time, which should coming off the low basis has had increased interest and rate higher and that should help. But these are very crude way to describe it.

Okay. So let me start on Slide 10. And then I'll ask Venkat to comment. I mean, what you see here is that we've got pretty good cadence, Chris going, where we've been spending typically around GBP 300 million getting about GBP 700 million back. That's because the growth efficiencies that we are targeting relate in part to people actions over the last couple of years, but also sort of more general process improvements, et cetera, which have fewer costs associated with them. I think more specifically to your question, Look, the changes that we are making in the third and fourth quarters of this year are sizable in terms of the impact. They relate both to the simplification of the organization and to some of the impacts that we're starting to see from AI.

So I would say that they are very large in comparison to what we've previously sort of undertaken. So I wouldn't necessarily expect that to repeat nor indeed the FDA, as you can see in our cost disclosures. But I think what we are seeing is that the technology opportunities here continue to indicate that there are further things that we can do to make the organization much, much more efficient.

And Venkat, you might want to pick.

Yes. I think there's a confluence of a couple of things happening here. One is what Anna has just said, the technology opportunity set has increased and its capability has increased. Second is, what do you have to do to harness. To harness that you have to build the infrastructure to improve your processes, modern technology, framework, simple hypothesis. Now that requires perseverance and investment, which we've been putting in.

And given the capital generation which we've had, given the success of the plan so far, that has given us both the capability and the will to make those investments. So what you're seeing is technology being able to deliver more, AI sits on top of this technology. You've seen the capability financially and otherwise to make the investment and will to do it in a sustained way. So we've presented today what we've done for 2026, and we'll continue to persevere [indiscernible] at this over the next few years.

Our next question comes from Jason Napier of UBS.

I guess the first one for Venkat. I think Barclays is executing really energetically on strategy through resting and the acquisitions that you've made. And I'm not sure the market is giving you much credit for that. And so I wondered whether you could start off by commenting on the sort of recent news flow and the tone of that news flow around capital allocations and TRSs in the IB. The share price has has proven reactive to that sort of coverage. So as a risk professional, I mean how do you think about risk in the business, the forecastability of earnings? And how do you talk to the market about those sorts of factors, please?

And then secondly, one for Anna. Just coming back to Slide 9, and I want to say thank you for the absolute cost guide. I think that is helpful given some of the questions we were getting. But focusing on Slide 9, your numbers for business growth inflation and investments are nearly 8% of starting costs. So two things. Number one, to think that those are the sorts of numbers that are required or might be normal for the bank, this GBP 1.4 billion in total. And then secondly, just in really high level terms, what are the sort of areas that are absorbing that kind of money in 2027, please?

Jason, thank you, first of all. Very, very good questions. Let me begin with the first one. I think the first one, and thank you for recognizing the efforts we've been putting in, into what you call energetic execution and disciplined execution. I appreciate a few words. So there's a philosophy here. There's an approach that's an attitude, there's a process by which we carry it out. And then there is what I would call noise in the market.

Our philosophy is clear. On execution, on making these plans, we've laid it out for the last 3 years. We laid it out in February for the next 3 years, and we are telling you what we are doing, whether it's on revenue, whether it's some business, whether there's some capital or there's some costs, it is an investment. And we will do our very best to continue to carry forth in that disciplined and hopefully, predictable way.

And when it comes to risk, and whether it's regulatory aspects or otherwise, we take this really, really seriously. I said earlier today on the interview that for 10 years at Barclays I've been Chief Risk Officer, Head of the Markets Division for a brief period and CEO. In this entire period, I have laid great stock on the importance of following the capital rules in letter and in spirit and being very prudently capitalized. And we aim to do so, and we are careful about what we do in these matters.

Anna has spoken earlier about these TRSs, both in terms of our approach and the quantum involved. And so what I will say to you is our commitment to continue disciplined execution, careful stewardship of the company's resources, including capital and liquidity. And we've been very clear even on capital that you've seen the flow of our -- the CET1, the capitalization ratio over the last number of quarters coming to the level where it has, staying at the level where it has, because we said our most important thing is to be well capitalized and well provided for capital liquidity. So we continue to expect to see that disciplined execution, energetic execution, as you said, and prudent stewardship of our resources.

Okay. Thank you, Venkat. So let me take everybody back to Slide 9. So, the numbers that you're talking about, Jason, include business growth and inflation. I just want to be very clear about what we put in there. That also includes investment -- BAU investment in our ongoing businesses. So all of the benefits that you are seeing coming through in Premier, in Corporate, in equities, et cetera, et cetera, are all contained within that number. We think that is a cost of doing business. And therefore, we're giving you a very fulsome run-the-bank cost here that includes inflation, includes that BAU investment includes the cost of acquisitions also.

And I genuinely think that you can't separate that from efficiency, because by growing the bank, you have the opportunity to create operating leverage. It's not just through FCA, as I mentioned before, it's actually about process improvement and the kind of volume benefits that you get when you are reducing marginal cost benefits that you get when you start pushing more volume through an existing platform.

I will contrast that with -- from the investments on the right-hand side that relate to future fee growth. So I think, well, I think Transaction Banking and think some of the technology changes that Venkat called out at the full year. So I would really urge you to take them together. And the way we think about it is this is at least a neutral run-the-bank cost, our objective here because the intensity of investment has gone up, the intensity of efficiency has to go up. So expect us to be pushing that collection, if you like, on the -- of things that are bridged by the Arrow very hard. That's what we're seeing.

Our next question comes from Andrew Coombs of Citi.

Just a couple of follow-ups, please. Firstly, on the hedge allocation, I think at the start of this year, you expect 55% of the hedge to be allocated to Barclays U.K. That's now increased to 70%. So intrigued on why the allocation has changed. So roughly over the course of the year and is 70% a good guide for the allocation going forward as well, please? And then the second question, a much broad question and as a follow-on from many of the ones you've already been asked. But you reiterated the GBP 31.5 billion revenue guide. If you take 9 months annualized, it gets you to about GBP 3.5 billion, but usually, you do see seasonality in the Investment Bank in Q4. So can you just talk through the puts and takes on that revenue guide? And what's giving you the confidence to reiterate it, please?

Okay. Thanks, Andy. So I think the disclosure that we have given you. So earlier in the year, it was actually about the growth in the structural hedge income. That confused everybody. So what we've done now is we have reverted to a much simpler table of income allocation. So not growth in income, but income itself, which is why you are seeing that movement from 55% to 70%. You are still seeing the allocation going down to the U.K. That doesn't mean to say that it will go down in absolute terms. Of course, it won't be but it's just that the structural hedge income is growing faster outside the U.K. That's in part because of the equity structural hedge but it's also because the tenors of deposit relationships outside of BUK are actually longer. And that really speaks to the strength in our Corporate Deposit book. So that's what's going on there. So apologies, but hopefully now clearer.

To your second question, look, the simple answer is year-to-date income growth is up 8%, and GBP 31.5 billion is 8% year-on-year growth. That's a simple answer, but let me try and be a bit more helpful. So we still see a path to circa GBP 31.5 billion. Although it's clear that Q3 income was weaker than we would have expected it to be or plan to be. But here's how I think about the building blocks. And those building blocks reflect the diversity of income across the group and our strategy and the natural momentum that we've got in this business.

So let me start with the most certain, which is NII. So NII has been about GBP 200 million up each quarter year-to-date. We expect that to continue. And what I should have said is to reach around GBP 35.5 billion. Q4 needs GBP 31.5 billion. Q4 needs to be GBP 500 million up. So GBP 200 million of it, we believe, relates to NIR.

The second part to this, I would call out, is financing. Financing has been on average about GBP 150 million up year-to-date. The third piece actually relates to something we talked about earlier, which is really the strength in our Investment Banking business. We have very good line of sight to the M&A pipeline. We have good line of sight to the capital markets pipeline, although obviously, that one is much more influenced by the uncertainty in the environment, and therefore, there's a bit more uncertainty there about when things will complete. But M&A is much more certain. And then finally, that brings us to markets, which is the thing that we've been focused on here today. But again, I'd just remind you, we've had very good momentum in market for the year. Thick intermediation specifically has been weaker in Q3.

So that's how we think about it. We continue to work towards that number, Andy. But just to be really clear, our north star for this year is RoTE and for the RoTE to be greater than [ 12. ] So that is the number that we are most focused on.

Our next question comes from Amit Goel of Mediabanca.

So just talking back to some of the previous comments and the implied kind of guidance. So I guess just basically on the back of -- on the cost guide or the implied for '28, so we talked about modest cost growth and still sticking to the low 50s cost income ratio. So when I'm doing that, I'm kind of getting to revenue expectation of or guide of around GBP 36 billion plus. So -- I mean that's about [indiscernible] Above consensus. So I guess my first question is really like what's kind of driving that or where you see the kind of delta versus the consensus on that?

And then secondly, if that is correct, then I guess that kind of points more to a RoTE of, I guess, closer to 16% versus the greater than 14% target. And the kind of 15% that consensus has got. So just basically, curious what your thoughts are there? And if that is consistent or -- and essentially, you do expect to materially beat your RoTE guidance? Or am I missing something there?

Okay. Let me take that. So I'm just going to -- I'm not going to comment on consensus numbers for 2028. I'll just take you back to the guidance that we gave you at the beginning of the year, which remains intact, which is between '25 to '28, we expect a greater than 5% revenue CAGR between those years. We expect the costing ratio to be in the low 40s, and we've given you some guidance on absolute and that we expect modest growth.

And then -- the final point is that the RoTE guidance is greater than 14%. Beyond that, I don't think we're in a position to sort of to guide further. But hopefully, you can see from the momentum in the business and the kind of confidence that we're putting around our cost plans and intentions that we are very focused on meeting those point of guidance.

Our next question comes from Edward Firth of KBW.

I just had two questions. One was on credit. I noticed that your Stage 3 coverage is down quite a bit, and it seems to be driven by Rest of World corporate loans where nonperforming loans were up quite a lot in the quarter. I wonder if you could tell us something about what are you seeing there? Is that a specific one-off? Or is that a trend? And it's interesting you're not taking any additional provisions against that. So I just wondered why that might be or what might the drivers be of that? So that's my first question.

And the second question is a broader question, I guess, to Venkat, probably asked a derivative of this more than once before, but I guess it's as personal how as ever. Rather, as Jason said, you're delivering a lot. You're delivering arguably ahead of the plan in a number of areas, but you're still the cheapest bank in Europe and probably the cheap [indiscernible] certainly have a major size. And I'm just trying to work out. Is that something that burns internally? Is that something that you feel offended by? And it is -- what can you do about it? Because clearly, delivering on your current plan and delivering on your last plan is not going to make any difference. We can see that the rating relatively is moving online. So, could we expect you come the full year that seems to you think you can be a balance [indiscernible] it's not something that just time is my question. And then just related to that, is there any reason why somebody shouldn't be [indiscernible] There's nothing in Barclays that stops that happening that's [indiscernible].

So Ed, please could you repeat the last question, your line is breaking up rather.

Something anybody could be disappointed, just that part. I did understand that.

Sorry. Can you hear better now?

Yes.

Okay. So my second question [indiscernible] was delivering very well on the strategy, arguably ahead in places, but you're still the cheapest bank in Europe and probably the world. And I'm just trying to work out, is that something that sort of burns internally? Because after 10 years, time is not going to hear that, I don't think. So should we expect, as you come to the full year? Is there things you can do to try and address that? Is that something you want to address? And I guess related to that, is there any intrinsic reason why a bank shouldn't bid for Barclays? Is there anything in there that stops people taking advantage of that cheap price?

Okay. So I will start, and then I'm going to hand to Venkat for that lengthy question. So, Ed, the same -- I looked at the same piece of disclosure actually and its quite difficult to read because actually what the table shows is the full year picture at the bottom and then the Q3 position at the top. [indiscernible] The disclosure is doesn't necessarily make that intuitively clear. So there is nothing beyond that, that I would call out to you. It's just MFS. Okay. So I'm going to -- Yes.

Thank you. You've given me the toughest question so far. Look, first of all, thank you for what you are saying about the fundamental performance of the bank, which, of course, I agree with and I share, I think we are operating well, and I'm very gratified by it. I will not be human if I said that I was more gratified with the way the stock market was valuing us a few months ago than I am today. There are lots of factors that go into this.

My -- at a simple level, we control a lot of the inputs and those are the inputs which we manage. And I hope we get the right output. I think our strategy is now three years old approximately. And for the first 2.5 years, the output, I think, recognize the inputs. And the inputs of, as you say, earnings are growing up, et cetera, et cetera. I personally have the greatest conviction in our ability to achieve our targets or will to execute disciplined in a disciplined and energetic manner and having studied mathematics for a lot of my life in the fundamental value that will come out of that in the net present value of an ownership stake in Barclays.

And so if I look at it that way, I do think that the fundamentals in reasonable prevail. And they have for a long, long time, and I don't think I should let 6 months affect us, there's a lot going on in the world. But I think when I look at the stock and I look at what should affect stock prices and something I've spent a good part of my life studying it's important for management teams to control the inputs, to run a company well to produce the returns for the shareholders. And then the shareholders will eventually, I think, value it appropriately.

Our next question comes from Benjamin Toms of RBC Capital Markets.

I'm sorry if I miss this really, but how much did your structural hedge notional grow by in October, I think you called out. And I think when we spoke in Q3, the expectation was that the notional would remain flattish to the year-end and current accounts have been flat in Q3. So I'm just wondering what assumptions have changed?

I know Dan departed the bank in the quarter. So I'm wondering whether you have a new Head of Treasury who is looking at things a bit differently in respect of operating with a strict caterpillar in an elevated rate environment? And then secondly, given the swap rates are elevated, can you give us some more color on what you're seeing at the front end on the mortgage pipeline, banks think about spread holistically, do you think you can grow mortgage spreads in the current higher rate environment to partially offset lower deposit spreads if competition remains intense.

Okay. Ben, we didn't call it out. You can see it's been broadly stable at the quarter end. To the extent that we change the hedge notional that means that we have more confidence in the stability of interest insensitive balances. The Caterpillar remains strict, is the way I would describe it.

Oh, yes.

But to your second question, on swap rates and mortgages, look, when swap rates move around, we can see price volatility in mortgages. We've certainly seen that both through the quarter and continuing. I think what we are seeing is that the market has swung a little bit towards remortgage, certainly in the current environment. So we're seeing good demand there. That is good for us because everybody forgets that before we bought Kensington, everybody's [indiscernible] is a very vanilla remortgage bank. And we have very, very good levels of retention. Our retention is around 80%. So very pleased with that.

And can I talk about that part, part of that is the investments we've made in the technology or remortgaging. So your time went from 45 minutes to get to 15 minutes to get the application resolved. These little things go a long way.

Yes, absolutely. So I think in terms of mortgage spreads, there's going to be a little bit of a mix thing here happening. I would call out. And your question is a good one, though. And rather than talking about mortgage spreads specifically, if I refer back to the answer I gave before, funding costs in Retail Banking has gone up. That's certainly true. Just because that growth in lending, the reduction of TFSME and the other participants that I called out, and you're seeing that in the fixed-term deposits, that's going to have to come out somewhere, but it's not something that I would call out right now.

Our next question comes from Alberto Artoni of Intesa Sanpaolo.

I have two on the investment banking. In, sorry for coming back on this one. You mentioned the lower level of clients. I was wondering if also you add some own proprietary trading that had some kind of impact or the market making activity sometimes the definition is a bit blurred and perhaps you had some position in your books that given the fact that the rates and spreads moved away to date may have had an impact on your performance this quarter? And if that's the case, could you please just give us a bit of color around that?

And secondly, on financing, on the market activity, I see, of course, that very good part of your equity story as you're increasing that component, which tends to be more stable. And so that's first very much a good development. And I was wondering if you see room for continued increasing in that part of the business also perhaps gaining market shares. Any expense of the other banks? Or you feel that you've now reached the market share you're comfortable with, and it will be difficult gaining market share going forward. And also, if there are any specific risks that you see in financing.

Thank you, Alberto. First of all, on FICC, on fixed income, there is nothing to call out. This is a client driven business with risk management limits. You can see our bar numbers. You can we run all the desks very prudently, aim to do so. And so there's really nothing to call out here. Second, on financing. One of the things we've said here is that 98 of our top 100 clients have financing relationships with us.

And I've also said that what we aim to do is to do this with our very, very biggest clients and to do more of it with them. The risks in this business are always client selection there are names of prominent funds every now and then, there was one in this last quarter, which cause anxiety for banks, they deal with them, I'm happy to say we didn't deal with the one that was mentioned. But client selection is important and then being watchful of volatility in the market is important.

But having said all of that, as I said, we focus on the larger clients with whom we have the deeper relationships. And I would look to gain share by doing more with them rather than expanding the universe of clients beyond what I think is prudent.

May we have the next question, please, which I believe is the last question.

A final question for today comes from Nicolas Payen, Kepler Cheuvreux.

Just one on financing, one on the U.K. Corporate Lending growth, please. On financing, coming back on that topic, what constraints for the growth in prime financing versus fixed income financing? And between those two, which offer the best return other funding, liquidity and balance sheet costs, please?

And then on the U.K. Corporate Lending growth, as you deploy more and more deposits into lending, what do you see as bottleneck here? Is it demand from Corporate pricing, the credit appetite or even your platform?

Okay. Why don't I start? I'm sure Venkat will add. So on the financing growth, I think the simple point here is that fixed income financing, Venkat often calls Barclays to hedge that fixed income built. We have always had a much stronger market share in fixed income financing than we have in Prime. What we've been able to do is grow prime alongside fixed income financing and really leverage clients across both parts of that business, as Venkat said running as a single face to the client. So I think our ranking on Prime is still below what it would be in fixed income finance. So that's probably the simple answer, but I'll let him add.

On U.K. Corporate Lending, the way I think about this is we are the largest [indiscernible] now we make that somewhat difficult to understand because it's across 3 different divisions, but we brought that together for you today. We also have the lowest loan-to-deposit ratio. That tells you that we have very strong relationships and the real opportunity here to grow across business banking, across International Corporate Banking and U.K. CB, across all three of those strides.

And so I wouldn't say there's no liquidity constraint here. It's really about growing those relationships and being able to lend to those clients, which we have been. And we've built -- we've now got about 45% of our Corporate Banking clients on iPortal. That will be 100% by the end of the year, and that means that they can bring their relationship much more holistically together. So the growth that you've seen in our lending is even before that technology really starts to hold.

Venkat, anything you want to add on the Corporate Financing and Prime?

Yes, just working backwards on the Corporate Lending. What you've seen over the last couple of 3 years is we've actually removed bottlenecks. We -- the technological investment in iPortal is one of them. And then the capital in the balance sheet we lend to this business is the other. So the focus is really strong and for all the other reasons Anna said that we're very confident in this area. And we are the largest corporate bank in the U.K. Second, on financing, just the thing to add is that we view the relationship with the client holistically. We do fixed income and equities with both, and that's partly our working with the largest clients. So there is not a competitive element between capital allocation between the 2 of them. It is actually combined and holistic coverage. And that is the basis of that franchise, which is the strong client relationship. Listen, thank you, everybody. Thanks for your time. Thanks for your attention. Thanks for your tough questions and your encouraging words. And I always find this call a pleasure.

This concludes the Barclays Q3 2026 Results Analyst and Investor Conference Call. Thank you all for joining. You may now disconnect your lines.

Welcome to Barclays Half Year 2026 Results Fixed Income Conference Call. I will now hand it over to Anna Cross, Group Finance Director; and Dan Faircloth, Group Treasurer.

Good afternoon, and welcome to the Half 12026 Fixed Income Investor Call. I'm joined by Dan Farkas, our Group Treasurer. Let me begin with a brief overview of our financial performance. Q2 was another strong quarter with a group return on tangible equity of 16.1% and -- all 3 U.K. businesses delivered ROE above 20% with consistent volume and revenue growth. Investments we have made allowed us to, again, monetize strong markets and banking wallet in the investment bank, where rate increased nearly 4% versus last year to 16%.

And while the U.S. consumer bank delivered 10.5% ROTE, excluding the American Airlines gain on sale. Given the momentum and breadth of our progress, we are upgrading the group income target to circa GBP 31.5 billion in '26, and we remain confident in delivering Group ROCE greater than 12% in 26 having achieved 14.8% in half 1.

We are using additional capacity from stronger H1 profitability to structurally improve Barclays returns We, therefore, anticipate taking additional cost actions later in 26 to create greater cost flexibility from '27.

These plans increase our confidence in delivering 28 RoTE greater than 14% and accelerate our progress towards an all-weather ROTE beyond '28, these actions will not disrupt the group's distribution plans or financial targets in '26, including the high 50s cost income ratio target.

Moving to Slide 4 on credit quality. The Q2 group impairment charge of $571 million equated to a loan loss rate of 51 basis points. Consumer and corporate balance sheets remain robust, and borrowers are behaving rationally. As an accounting meter, consensus unemployment expectations increased as we anticipated, consuming the post-model adjustments that we recognized last quarter in Barclays U.K. and U.S. Consumer Bank.

We retained the 68 million P&A in the investment bank, recognizing downside bias due to global macro uncertainty. For '26 we continue to expect a group loan loss rate around the top of the 50 to 60 basis point range. Before handing over to Dan, let me cover the economic trends in the U.K. Whilst Barclays benefits from diversification with 40% of income generated in the U.S., the U.K. is our home market.

The U.K. economy has been growing in nominal and real terms and at a faster rate than the Eurozone. This has supported real wage growth, rising house prices and stable employment. Declining investments since the late 2000s meant that U.K. corporate debt to GDP has fallen to a multi-decade low.

Corporates have had the capacity to invest but not the confidence. This seems to be changing. The majority of corporates we survey tell us they are confident in their prospects. Firms plan to increase investment in the next 12 months, including in technology, this is broad based across sectors and regions with overall U.K. corporate lending, up 9% and in the past year.

As you can see from our results for several quarters, Barclays is helping foster U.K. growth, not just benefiting from it. I'll now hand over to Dan for the balance sheet highlights.

Thanks, Anna. Let me begin first with capital on Slide 7. We ended the quarter with a CET1 ratio of 14.3%, generating 115 basis points of capital from profits year-to-date. Pro forma for the GBP 1 billion buyback, the CET1 ratio was 14% and consistent with our intention to operate around the top of our 13% to 14% CET1 range, pending regulatory clarity.

Attributable profit growth should continue to drive strong capital generation and EPS momentum which we amplify through share buybacks.

Looking ahead, guidance for regulatory RWA inflation in 2017 remains unchanged at GBP 19 million to GBP 26 billion.

This includes Basel III changes on the first of January and implementation of IRB in the U.S. Consumer Bank, which we now expect in H2 '27. Group Pillar 2A requirements are expected to reduce following each of these events, and we will provide further guidance as we get clarity. On the broader regulatory landscape, we note the recent financial stability report but believe more can be done to drive U.K. growth. .

Proposed changes would reduce Barclays Tier 1 leverage requirements modestly by 8 basis points, supporting its position as a backstop measure. We continue to work closely with the Bank of England to promote international alignment and competitiveness of the U.K. financial services sector. Moving up the capital stack. On Slide 9, we show our Tier 1 and total capital requirements as a proportion of RWAs. We continue to target a prudent buffer against each of these requirements, which helps us manage any RWA and FX movements as well as our issuance and redemption profiles.

Our Tier 1 ratio is 18% and total capital ratio is 20.3%, maintaining healthy headroom above our 14.6% and 17.8%, respective regulatory requirements.

Within these ratios, we had an AT1 component of 3.6%. As stated at the full year results, we had a more limited issuance requirement for AT1 and Tier 2, given our lighter redemption profile.

I'm pleased to report that our planned '26 capital issuance is now complete, following our inaugural AUD 1 billion and GBP 750 million in Tier 2 both price this quarter. Turning now to Slide 10. Credit market conditions have been strong in the first half of the year, and we have completed our GBP 10 billion MREL issuance plan against this supportive backdrop.

Looking forward, we may look at some prefunding of '27 volumes subject to market conditions. Finally, at the operating company level, we recently issued our first publicly placed Barclays Bank PLC senior since 2020 and with a EUR 3 billion offering. This was a good example of ensuring our funding sources remain active and diverse. On to the next slide on liquidity.

Our average LCR of 158% is GBP 117 billion in excess of our regulatory requirements. Our average net stable funding ratio was 136% and and the loan-to-deposit ratio was 75%, both demonstrating a continued robust liquidity position. On Slide 12, you can see that our deposit base increased by 1% across customer segments.

This quarter, we saw continued growth in international corporate bank deposits as we strategically target growth across the U.K. and U.S. Elsewhere, our deposit base continues to demonstrate a high level of stability as a source of funding with diversification between customer segments, geographies and currencies.

A significant proportion also benefits from long-standing operational relationships and deposit insurance. Turning to Slide 13. Structural hedge income growth is predictable and benefits all divisions accounting for circa 45% of Q2 group NII. It will drive around half of the planned group income growth from '25 to '28 and remain a meaningful tailwind beyond.

As a planning matter, these expectations are based on a 3.5% reinvestment yield. Swap rates were above this level again in Q2 of 4.3%, further supporting NII in future years. Finally, a quick word on credit ratings. Our target remains for Barclays PLC senior to qualify a single A composite across all indices. This would require an upgrade from either movies or S&P.

We believe the outcomes of our strategic plan and consistent execution to date support this objective, particularly in terms of increased profitability and greater capital generation. We will continue to engage with all credit rating agencies on this topic. With that, I'll hand back to Anna.

Thank you for your continued support of Barclays and our broader franchise. We will now open the call for questions. Operator, please go ahead.

Our first question for today comes from Lee Street of Citigroup.

I have 3 questions, please. Firstly, just looking at your business mix, you obviously make -- you allocate most capital to the investment bank that make high returns in the other divisions. . So my question is, would it make sense to look for further sort of inorganic growth opportunities in the high-returning business models to grow those further? That would be my first question.

Secondly, on the Bank of England proposals in the financial stability report -- what would it take for you to think about changing your common management buffer and potentially bring that lower given the idea of releasable buffers. .

And then finally, you mentioned the international alignment of capital requirements and talking to banking about that. Just in your view for Barclays, where do you think the biggest gaps are where Barclays most disadvantage on that level from your perspective? Then my 3 questions. .

Okay. Thank you very much, Lee, for joining the call. Why don't I start and then I will turn to Dan? So look, in terms of the balance of capital across the group and the relative returns, as you can see, we've been really focused on improving the IB returns to stability of capital but also capital and cost discipline.

And we're happy with the structural improvement in returns, and we're not done yet. So we expect those to continue to edge upwards. On the sort of second part of your question, which is really around should we pursue inorganic growth elsewhere -- we feel like we are pursuing the right pace of organic growth.

So we've deployed $25 billion of uncertainty that we expect to do in RWAs so far in the U.K. businesses. And we're growing at around 5% a year, and we think that's the right rate of growth for organic growth underpinned by the capabilities that we're putting down across both retail and corporate banking. When it comes to inorganic opportunities, the bar is very high for us -- so we would want something that would deliver either additional capability or additional volumes.

So Kensington, for example, was capability. Tesco is about volume. When we look at the returns of those businesses, we are considering those or the returns on any acquisition, we would be considering that relative to the returns on the buyback. So we're very focused on the capital hierarchy that we have, which is 1 regulatory compliance at all times.

Number two, distribution net investment in the business. So that, again, would be a high bar -- and then thirdly, we would look at the type of business model that we saw in front of us. And specifically, you'll have seen that we are very much leaning towards digital opportunities. all those with a digital basis to them because we feel those business models have the greatest longevity.

So of course, we will continue to look at inorganic opportunities but it's an organic plan. So expect us to keep plugging away around 5% a year. And then to sort of hub tuck-ins as and when we see all those factors being satisfied.

In terms of your second question, we've been fairly clear that you should expect us to operate around the top end of our range until we get regulatory clarity, and we expect to get that in 2 chunks -- the first, the Pillar 2A clarity around Basel 3.1 implementation, which we should receive at some point at the back end of this year. And then secondly, we would expect to get a bit more Pillar 2 clarity when we land our AIRB model for U.S. cards, which we would expect to be in the second half of next year.

So -- those are the points at which we would reexamine the range within which we operate. Obviously, it's 1 input, and we would be considering other factors at the same time.

Dan, do you want to add .

Yes. Just to add a little bit on that second question. I mean there's nothing in the FSR proposals that would change the way that we think about offering Barclays. So the things that Anna referred to are obviously mechanical reductions in the MDA requirements. So there's no change in stance there.

Obviously, we'll watch the bite as it unfolds on the concept of a single usable buffer, but that feels like that's got quite a long way to run. And obviously, will be a long international discussion. Third question I think you asked was just sort of what -- how do we think about international competitiveness.

So this is an important point for us in terms of our regulatory engagement. -- there were some positives that came out of the Basel or the PRA Basel package on IMA. We felt that they have listened to the industry in a number of areas.

And then there are a number of helpful points, particularly around simplification. But more broadly, we think that there is more to be done here, both to promote growth, but also to make sure that there's a level playing field. So A couple of things that we would call out is the approach to models broadly, a specification around the USA models and the rest of the Basel package, the standardized Basel package more broadly, where we feel there's more to be done. Thank you, Lee. Really appreciate the question.

Our next question comes from Daniel David of Autonomous. Your line is now open. Please go ahead. .

I've got 3 questions. The first 2 are kind of related. -- on the leverage changes, which were kind of more targeted at the size, did you feel a bit harshly treated as a GSIB. I guess did you expect any changes to allow UKGI to become more competitive in the global context I guess when I look at what's changed, it's mainly a size, as I say.

And then I guess related to that, as QT progresses, -- are you seeing any notable impact on your balance sheet and just what you can extend to certain businesses as kind of leverage maybe becomes a little bit more binding as Central Bank reserves dissipate -- and then the final one, Dan, you just mentioned that kind of FPC vision of a single releasable buffer. I guess what stands out in that is that Pillar 2G could become part of the NDA? Do you think that's where we're headed longer term? And interested to hear your views.

And then just finally, all the best in the new roll down. Thank you. .

All right. Let me start on those. Look, the leverage proposals were obviously a little bit disappointing in terms of the aggregate impact. I don't think it was specifically around the side point.

Obviously, the Bank of England was using the flexibility that they have within the Basel Rene, and 1 of those was obviously on the CCyB. So really, the reason why some banks got more benefit than others was because the CCYB where the U.K. obviously is the largest component was a bigger portion of their capital stack. So I think it was more about what room for maneuver did they feel that they had rather than necessarily targeted at OSI versus G-SIFI specifically.

Obviously, there's more to come from the Bank of England in overall on this reform package. The second question on Q2 is interesting. So we haven't really noticed any particular change in the way that we manage the balance sheet. But it's obviously interesting that we do seem to be moving closer to the preferred minimum reserve level that the Bank of England have cited I think another kind of interesting observation for the market, it's just the fact that we are seeing a significant uptick in the use of the Bank of England repo reserve scheme.

So that does suggest that other banks in particular are positioning around those reserves scarcities, but not impacting us, particularly directly. And then your final question, I think it's hard to say where this is going to go to the ones because I think the debate is really at the beginning.

Clearly, the the financial stability report, again, put out a signal that it's a topic with the Bank of England wants to explore, but we still haven't seen any detail on it. So I expect we will get more of that as we move into both on the Bank of England and then potentially internationally.

Okay. Thank you, Don, for that. Can we have the next question, please?

Our final question for today comes from Rob Smalley of Mackay Shields. Please go ahead. .

Thanks very much for doing the call also with 3 partners. First, in terms of the IB, the performance and the balance sheet growth, we've seen your domestic competitors really grow their balance sheets and grow a number of different businesses over the past 6 to 12 months.

At the same time, you've said that you're going to keep the capital commitment and IM balance sheet pretty much stable. So do you anticipate a growing gap between you and some of your global competitors here as a result of of just the size of the businesses going forward. And is your relative muted issuance versus some of, say, the large U.S. banks who need to fund a growing IB balance sheet indicative of this as well. That's my first question.

Secondly, you mentioned on the other call, earlier this morning, the IPO business was mentioned in your participation in it. At the same time, you're also looking to grow your wealth management business. One of the American banks had given some data around employees of IPO-ed companies becoming wealth management clients at their bank.

Do you have any data or at least some color around conversions from where you participated in IPOs and getting those people into the Barclays Wealth Management platform.

And then third, just on domestic deposits. I know there's been discussion around this already. But there is a lot of competition. You've done a good job in increasing deposits overall. But where does that go from here? And will you need to issue more out of the opco in the institutional market.

Okay. Rob, why don't I start and then I will hand to Dan to make additions and pick up the third one. So on the U.S. banks, our strategy is well set out here, and it's 1 of discipline.

And what we mean by that is not only running the business for returns but with a risk posture that's appropriate for the environment. And so that's really what you see us doing here. So we're extending a bit of balance sheet, both in terms of RWA more significantly in leverage but we're doing so as a means to an end to ensure that we're getting a commensurate increase in revenue over RWAs, which you can see in the quarter, but also that we manage the risk well. So you'll note the VAR has not really changed, no trading loss days in the quarter. That's really important to us that we manage this business within disciplined boundaries. We feel like we are making good progress.

So we're happy with its structural progress in terms of the consistency of that revenue over RWAs and the consistency of its cost. So we wouldn't recognize that we feel like we're falling behind our expectations at all. And from here, we do think that there are more opportunities both to optimize within the capital framework that we've given it, but also that much of the growth areas that we're very focused on within this business do not require balance sheet.

So M&A, ECM, the financing business certainly leverage heavy, but not RWA-heavy -- and most importantly, the international corporate bank. And the other good part of that is, clearly, they are businesses which are more recurring, more fee-based and really address something that Lee was pointing to in his initial question, which is about the lower than group R&D in that part of the business.

To your second question, we actually believe that our wealth opportunity is much wider than that. But just to remind you that our wealth business is a U.K.-focused business. And so there may be somewhat of a geographical gap between where we do our IPO activity and where we do our wealth activity. Clearly, our private bank is more of an international factor, but the wealth opportunity is very much U.K.-based -- and we're really focused on the 400,000 clients that we have in Premier that we believe would benefit from that advice.

So think of it as probably a bit of a narrower geographical focus, Rob, but 1 that is much wider in terms of the pool of clients that we're going after. Dan, anything you want to add or the third part of the question?

I'll just take the part of the question. So U.K. deposits, obviously, that primarily relates to our ring-fence banks of the U.K. That entity has a very comfortable funding position. But if we felt we needed to do more funding, we would like we do that in secured form and covered.

So very unlikely that we would do any unsecured issuance from the U.K. Clearly, we have issued, as I said in the prepared remarks, at the opco level for Barclays Bank, which is a non-ring-fenced bank -- but that's just 1 of a broad range of funding sources that we have available. Obviously, we raised international deposits there. And we have other wholesale funding instruments across the markets.

Sorry to interrupt you. It looks like we do have more questions now on the line. So perhaps the question.

Our next question comes from Balearia of Associate General is now open. Please go ahead. .

Thank you, Ana Dan, for holding the call. Just 1 question actually around funding. 2027 has been mentioned, prefunding that. And I would like to understand a little bit more of how I should be thinking about the quantum of that prefunding and within what part of the capital capital structure. So are we talking more about senior holdco issuances to sort of prefund your upcoming dollar maturities early January?

Or are you thinking about a little bit of sub debt? And then also a question on the AT1. You issued, obviously, the CA1. I was trying to understand whether this is a sort of a one-off transaction? Or are you really thinking about being more present in the market going forward? That's it on my side.

Yes, thanks for the question. I can take that, Dan. We generally don't sort of give specific guidance on prefunding, and we don't have a fully formed view on what prefunding we would do. So we will really respond there to market conditions and where we see relative validly.

So not too much further to add on that at this point. In terms of the AT1, and obviously, when we come to market, we will look at the broad set of opportunities available to us. Obviously, we have historically focused predominantly on dollars and sterling.

That's where the market is deepest for us. but we will continue to look at opportunities elsewhere where they're attractive they provide diversification and where the pricing is right. So we've issued in Singapore dollar as well in the past. So we'll be opportunistic and where we go in addition to dollars and sterling. Thanks for the question.

Yes. Thank you, .

Our next question comes from Pranav of Credit Agricole. Can you hear me?

I have 2. So first, on LCRs. I saw that your LCR declined from 170% to around 158% at the end of this quarter. compared to the end of last year. Can you please walk us through the key drivers behind this decline, perhaps if you're anticipating any material flows in the near term?

Or -- and also if you can share your target operating range for the LCR, if you share that? And the second question would be on the SRTs. I noticed that you had around GBP 700 million benefit this quarter. If you can provide any forward guidance on your SRT pipeline, specifically how much RWA reduction or in terms of CET1 benefit you plan to achieve through SRTs in the coming motors or in FY '26. .

Yes, I'm happy to say those questions. Thanks for -- so yes, the LCR has declined over the past 12 months or so. So this firstly relates to something that we called out probably 12 months ago now, which was a change of methodology within our prime financing business, which moved to a more conservative approach -- we report the LCR on a 12-month rolling basis.

So that has just taken time to come through the ratio. So -- that was the sort of mechanical effects that we disclosed 12 months ago. And obviously, it's been quite an active quarter in terms of investment banking activity. and financing, in particular. So we've obviously leaned into that and use some of our asset is funding to support those clients but I wouldn't call anything else out, particularly in terms of where the LCR ratio will go from here.

SRT. So we've talked about the broad scope of our SST activity in the past. The vast majority of our SOC is in the Colonade program, which provides protection on our corporate loans -- that program is sort of largely scaled.

So not -- I wouldn't call out material changes in that from a volume perspective. And then the rest of the activity that we have is relatively small. Some mortgages and some consumer loans. So I wouldn't call out too much in terms of the forward pipeline. Largely, that will be replacing the transactions as they come up for amortization.

I would say that we have issued a little bit more in the last quarter. We've just stepped into some of the upcoming amortization that we would have from those programs. It's very consistent with what we've done on the overall MRO issuance. We've just got ahead of refinancings.

The only thing I would add to that is just certainly on the BUK side, and I think that's the transaction that you are referring to. There, what you've seen us do is a series of transactions that really allow us to optimize the balance sheet and what we're retaining.

And they are sort of one-by-one commercial decisions that we make. And I contrast that as Dan says, with the sort of programmatic nature of Colonade which is largely upscale -- so thank you for those questions. I think that's our final question. So I'd just like to thank you all for your interest in Barclays and for joining us on the call today.

And whilst he really doesn't want me to do this, I'm going to say thank you to Dan for his 25 years in Barclays. For those of you who don't know, Dan is moving to Australia with his family. So be a letter, you may not see Barclays presence in the old market, but you're definitely going to see down -- and I think you'll all join me in thanking him for his stewardship and wishing him luck on the other side of the world. I suspect this is not the last time we will see an fair. So thank you for that. We'll see you on the road.

Thank you. Thanks, .

This concludes the Barclays Half Year 2026 Results Fixed Income Call. Thank you all for joining. You may now disconnect your lines. .

Welcome to the Barclays Half Year 2026 Results Analyst and Investor Conference Call. I will now hand over to C.S. Venkatakrishnan, Group Chief Executive before I hand over to Anna Cross, Group Finance Director.

Good morning, everyone. Thank you for joining Barclays' results call for the Second Quarter of 2026. I'm pleased with our performance in this quarter. We have delivered strong revenues. Our U.K. businesses have demonstrated robust performance across the segments. The Investment Bank continues to do well, both structurally and cyclically, taking advantage of a favorable environment this quarter. We are achieving consistently higher returns across our businesses and therefore, delivery for you, our shareholders. Income of GBP 8.3 billion was up GBP 1.2 billion from the same quarter last year. We also grew profit before tax by more than 30% to GBP 3.3 billion, and we remain robustly capitalized with a CET1 ratio of 14.3%.

Given the momentum and breadth of our progress, we are upgrading the group income target to circa GBP 31.5 billion in 2026, and we remain very confident in delivering group ROTE of greater than 12% this year, having achieved 16.1% in the second quarter, and 14.8% for the first half. We are balancing progressive returns and distributions with investment to secure sustainably higher RoTE. We are increasing shareholder returns, announcing a GBP 1 billion share buyback and an GBP 800 million interim dividend. This brings the first half distributions to GBP 2.3 billion, up 61% versus the first half of 2025. In our investor update in February this year, I spoke of an accelerating ambition for Barclays, forging segment-leading operationally efficient businesses primed to support growth. We said we would build the foundations for an all-weather RoTE from 2026 to 2028 with the aim of sustainably higher returns beyond 2028.

As we discussed, our businesses are now revolving around technology, and our aim is to build standardized foundations, use modernized approaches and based on harmonized systems and processes. All of this is powered by our talented and inventive colleagues. And we are using additional capacity from our strong first half profitability to structurally improve Barclays' returns. This program is showing encouraging results. Therefore, after our increase in distributions, we will use some of the capacity from our stronger first half profitability to take further cost actions later in 2026. We anticipate that this will create greater cost flexibility from 2027 onwards. These plans increase our confidence in delivering a 2028 RoTE greater than 14%, accelerating our progress towards an all-weather RoTE. Anna will expand on this shortly. All 3 U.K. businesses delivered RoTE above 20% this quarter with consistent volume and revenue growth. Investments which we have made have allowed us again to monetize strong markets and banking wars in the Investment Bank, where RoTE increased nearly 4% versus last year to 16% in this quarter.

While the U.S. Consumer Bank delivered 10.5% RoTE, excluding the American Airlines gain on sales. Operational improvements across the group are delivering stronger structural returns and a better customer experience. We have achieved around GBP 350 million of gross efficiency savings so far this year. As I have mentioned, we want our businesses to be segment-leading, driving growth through new capabilities and deeper client relationships. Our U.S. consumer bank is entirely digital with over 25 million customers and not a single branch. In this quarter, we completed the acquisition of Best Egg, adding advanced consumer loan capabilities for our customers and partners. We have also announced a partnership to provide card products in the Samsung wallet in the U.S. Our segment leading offering in the U.K. is premier banking. In this quarter, we have commenced a refresh of our banking app and launched Premier Wealth Management to provide planning and advice to premier customers with no upfront fee. We have also announced the acquisition of GoHenry, which we expect to complete later this year, and this will help attract the next generation of customers to Barclays U.K.

Lastly, we are expanding and enhancing our branch network to meet the changing preferences of our customers. Our segment-leading proposition for wealth customers in the U.K. also extends to providing low-cost, transparently constructed risk-appropriate products to help them build their financial features in addition to Premier Wealth Management, which has no upfront fee. From the first of May 2026, we have removed custody charges for all customers of Barclay's direct investing, our self-directed investment platform. This is now the most competitively priced such alternative for those who seek full service investment with the security of a bank provider. I'm highly confident in achieving the group RoTE greater than 12% in 2026, progressing to more than 14% in 2028. We have increased the group RoTE from 9% in 2023 and to 12.2% in the last 12 months. And we have driven this improvement through consistent execution of our plan. We are on track to deliver around GBP 31.5 billion of income this year versus the original circa GBP 30 billion target. This reflects broad-based franchise growth and progress to drive greater productivity in the investment bank. The benefits of our strong performance for TU, our shareholders.

We have announced GBP 9 billion of distribution since 2024, well on track for more than GBP 10 billion by the end of this year. And by growing our highest returning U.K. businesses, we are building the foundations for sustainably stronger returns in 2028 and beyond. I have told you before that the U.K. is a great place in which to do business and from which to do business. Global and domestic events have not changed this. The U.K. economy has been growing in nominal and real terms and at a faster rate than the eurozone. And this has supported real wage growth, rising house prices and stable employment. And as you can see from our results for several quarters, Barclays is helping foster U.K. growth, not just benefiting from it. Anna will outline how we are doing so shortly. Declining investments since the late 2000s meant that U.K. corporate debt to GDP has fallen to a multi-decade low. Corporates have had the capacity to invest, but not the confidence. This seems to be changing. The majority of corporates we survey tell us that they're gaining confidence in their prospects. Firms plan to increase investment in the next 12 months, including in technology. This is broad-based across sectors and regions with overall U.K. corporate lending dropped 9% in the past year.

Barclays is backing the future of customers and clients across the U.K. We are driving U.K. growth and prosperity and all the while bringing stronger and more consistent returns for shareholders. Anna, over to you to take us through the second quarter financials in more detail.

Thank you, Venkat, and good morning, everyone. Slide 6 summarizes the financial highlights for the second quarter and first half, but I will begin with Slide 7. We increased 3.8% year-on-year to 16.1%, including a 1.2% benefit from the AA portfolio sale. Profit before impairment increased by 29%, reflecting income growth and positive operating jaws of 9%. We continue to drive EPS growth which increased 43% year-on-year to 16.7p. This is disproportionately driven by operational progress with attributable profit up 36% year-on-year as you can see in the bottom right. Lower share count from GBP 3.2 billion of buybacks executed in the last 12 months further amplified this.

We grew income by 16% to GBP 8.3 billion and expect 2026 to be the ninth consecutive year of income growth. As you can see on Slide 8, more stable income streams from financing and markets, retail and corporate grew from GBP 4.6 billion 2 years ago to GBP 5.9 billion in Q2. Given year-to-date momentum, we now expect income to be around GBP 31.5 billion, up GBP 0.5 billion from prior guidance. Group NII, excluding IB and head office increased by 10% year-on-year. Lending momentum continued across all divisions while deposit growth supported full reinvestment of the structural hedge. We now expect group NII of more than GBP 13.7 billion in '26 Structural hedge income growth is predictable and benefits all divisions accounting for circa 45% of Q2 group NII. It will drive around half of the planned group income growth from '25 to '28 and remain a meaningful tailwind beyond. As a planning meter, these expectations are based on a 3.5% reinvestment yield. Swap rates were above this level again in Q2 at 4.3%, further supporting NII in future years.

Moving to costs. The group cost-to-income ratio improved to 54% from 59% a year earlier. Year-to-date, we have delivered GBP 350 million of gross efficiency savings, including GBP 200 million in Q2. Total costs increased by circa GBP 300 million year-on-year, reflecting business growth actions. These include around $200 million of additional compensation accruals in Q2 in the investment bank to better align income and costs. and the decision to shift the compensation mix of material risk takers, our highest paid employees, reflecting regulatory changes. Awards to be granted from '27 will move towards higher variable and lower fixed pay with a shorter vesting period. This will increase costs in by GBP 100 million to GBP 150 million weighted to the IB and provide greater cost flexibility from 2027. As referenced by Venkat, we anticipate taking additional structural cost actions in H2 '26, funded by stronger half 1 profitability.

Our recent run rate is around GBP 300 million in each of full year '24 and '25. Having recognized around GBP 100 million so far this year, we anticipate up to GBP 500 million in H2. Given an expected ROI of around 100% within 12 months, these actions should drive a commensurate improvement in 27 gross efficiency. The group's distribution plans and financial targets will not be impacted, including the high 50s cost income target. Turning to impairments. The Q2 group impairment charge of GBP 571 million equated to a loan loss rate of 51 basis points. Consumer and corporate balance sheets remain robust and borrowers are behaving rationally. And an accounting matter, consensus unemployment expectations increased as we anticipated, consuming the post-model adjustments that we recognized last quarter in Barclays U.K. and U.S. Consumer Bank. We retained the GBP 68 million PMA in the investment bank, recognizing downside bias due to global macro uncertainty. For '26, we continue to expect a group loan loss rate around the top of the 50 to 60 basis point range. U.S. consumer behavior remains resilient as we show on Slide 45 in the appendix. We had expected the American Airlines portfolio exits to increase 30-day and 90-day delinquency rates by circa 30 bps and 20 bps, respectively. Instead, both rates fell in the quarter. This reflected repayments due to seasonal tax refunds, which were larger than usual following U.S. tax changes. Delinquencies in the General Motors portfolio also normalized as expected.

Turning to U.K. Lending. Consistent execution of the strategy means that we have deployed GBP 25 billion of U.K. business growth RWAs since '24 on track for circa GBP 30 billion by the end of '26. U.K. lending grew 5% year-on-year consistent with our guidance and recent track record. Our mortgage application share increased versus Q1, having exceeded the stock share for the past 9 quarters and our retention experience remains strong. The multi-brand strategy is also working in cards, demonstrated by consistent acquisitions since Q1 '25, as you can see in the top right. Business and corporate investment appetite remained strong. Core business banking lending has grown consistently for 6 quarters. And U.K. corporate lending grew by 12% year-on-year, continuing the trend of growing faster than the U.K. market for the past 18 months. The next slide shows how we are doing this. As part of the Corporate and Investment Bank prior to resegmentation in '24, U.K. CB did not have the capital to lend nor the investment in technology that it needed.

As you can see in the top left, this resulted in a loan-to-deposit ratio of 31% compared with 50% to 75% for peers and a lending market share of 9% versus 22% for deposits. Since then, we have been on a journey to rebuild UK CB. Whilst we have further to go, lending share has risen by 70 basis points and deposit share by 40 basis points with a loan-to-deposit ratio increasing to 35%. Lending has grown by 19% in the past 2.5 years. We have attracted around 1,400 new clients in this time with around 40% already borrowing from us driving circa 70% of loan growth. The risk characteristics of these clients is similar to the existing book, as you can see from the default grade statistics in the bottom left. Pleasingly, we have half the time taken for new clients to use 4 or more products. Investments in iPortal are delivering real benefits with 65% of client interactions now self-serve. There are further opportunities as we add functionality to the enhanced mobile app and migrate all clients to iPortal during 2016, reducing the number of access platforms from 5 1.

Now turning to Barclays U.K. We show the financial highlights on Slide 16, but I will talk to Slide 17. RoTE increased to 20.4% and Income grew by 7% year-on-year, while costs were flat, supporting positive operating jaws and a 3% reduction in the cost/income ratio to 53%. During Q2, we integrated Tesco Bank's finance and HR systems. We continue to expect a low 50s cost income ratio in '26, though the anticipated SCA that I discussed earlier may lead to higher costs in H2 versus H1. These will drive gross efficiency savings in '27, supporting lower year-on-year costs in '27 and '28. NII increased to GBP 2 billion, up 8% year-on-year and 1% quarter-on-quarter. Structural hedge income momentum was partly offset by product margin headwinds and which was slightly more pronounced than in Q1. The structural hedge top-up at the end of last quarter led to a switch from product margin to hedge income with minimal net effect. Maturities of higher-margin mortgages written in early '21 reduced product margin as expected, but the ISA market was larger and more competitive.

In Q3, we expect a neutral to positive product margin despite competitive deposit pricing, reflecting card seasonality and day count. For the full year, we expect NII to be around the middle of the GBP 8.1 billion to GBP 8.3 billion guidance range. Deposit balances increased GBP 1.7 billion in with stable current and savings accounts. We priced time deposits selectively to deepen premier customer relationships. The acquisition of GoHenry, which we expect to complete in Q4 provides further opportunities to drive our premier strategy. Lending has grown consistently for 2 years, including 5% year-on-year growth in Q2, as the strong mortgage application volumes that I called out last quarter drove strong completions in June.

Moving on to the U.K. Corporate Bank. Supported by the operational progress I outlined earlier, U.K. Corporate Bank delivered a Q2 RoTE of 21.3%. Income grew by 8%, driven by strong NII, up 15% year-on-year, reflecting volume growth and structural hedge momentum. Loans increased 12% we grew deposits by 4%. Private Bank and Wealth Management RoTE was 26.9% in Q2, in line with the greater than 25% target in 26 and 28. Client assets and liabilities grew 8% and favorable valuation effects contributed to a 15% year-on-year increase in AUM. Net new AUM of GBP 1.8 billion for half 1 overall was broadly similar to the same period last year, with Q2 inflows of GBP 0.3 billion. Income grew 5%, while costs increased 12%. We plan to continue investments, including additional marketing and staff costs following the launch of planning and advice. While this investment will drive future growth, we now expect a mid-70s cost income ratio in '26. Turning to the Investment Bank. We continue to drive stronger and more consistent returns by maintaining RWA discipline, improving income stability and delivering operating leverage for 9 consecutive quarters.

We increased RWAs modestly to support client demand with around 40% of the year-on-year increase due to FX, while driving income to average RWAs up by 100 basis points to 7.7%. We did this in a disciplined way with stable bar and no loss days as we show on Slide 40. More stable income from financing and international corporate bank continue to grow as did our focus businesses, reflecting past investment. RoTE was 16%, up 3.8% year-on-year. Operating jaws were again positive despite additional performance costs in the quarter and changes to compensation mix will support further cost flexibility from '27. We remain confident in the circa 60% cost income ratio and 12% RoTE target for '26 despite the near-term cost of these changes and anticipated SCAs. Our strategy to improve the diversification of income is driving a stronger stable income base, and less seasonal variation as we show on Slide 41 in the appendix. We are rebalancing towards equities, which accounted for 32% of the income in Q2 versus 22% in '23. An advisory and ECM were circa 70% of fees were earned in the U.S. By 2028, we expect the international corporate bank to become a larger part of the IB, driven by transaction banking where we grew U.S. dollar deposits by 16% year-on-year.

Using the U.S. dollar figures, market income increased 17% year-on-year. Equities income was up 44%, driven by equity derivatives and prime financing, both focus areas whilst [indiscernible] was stable versus a strong comparator, around 1/3 of the growth in markets income came from financing, which grew 16% year-on-year and for the eighth consecutive quarter. This reflected growth in prime balances, particularly in Asia with around 80% of growth coming from markets top 100 global clients. Investment banking fees increased by 30%. Strong investment-grade activity in DCM more than offset a reduction in [ LevFin, ] reflecting deliberate risk and return on capital decisions. We participated in a growing advisory wallet with improved deal economics supporting 51% fee growth. The M&A pipeline remains robust with our share of announced deal volumes due to complete in 26 increasing year-on-year. In ECM, we participated in 9 of the top global deals in the quarter with income up 91% year-on-year, and the IPO pipeline for H2 remains strong.

Turning to the U.S. Consumer Bank. Let me start by outlining how portfolio changes affect the operational metrics. In April, we exited the American Airlines partnership, which reduced reported card receivables by circa $6.5 billion. The acquisition of Best Egg in May added around GBP 11 billion of managed balances as expected. These are originated to distribute, so do not materially affect reported balances, NIM or funding mix shown here. On an organic basis, we grew net receivables by 2% quarter-on-quarter. The mix effect from exiting AA drove a 40 basis point increase in NIM and the share of retail card balances increased to 24%. Given continued retail deposit growth and lower funding needs, the share of funding from core deposits increased to 82% and the cost-to-income ratio was 39% or 49%, excluding the $225 million gain on sale. Q2 RoTE was 30.2%, and we remain focused on delivering a circa 12% ROTE in '26, excluding the AA gain on sale. We delivered 10.5% RoTE in Q2 and 11% year-on-year income growth on this basis in Q2.

Costs increased by 12% and reflecting Best Egg costs of $45 million per month since the start of May. Volumes in the existing business and Best Egg were, as we expected, of 13.2% was broadly as expected, despite deposit margin pressure, and we still expect NIM greater than 13% for '26. Higher benchmark interest rates in the quarter compressed market-wide pricing of originate to sell loans, creating pressure on the non-NII line. Depending on the persistence of this effect, quarterly income may not fully build back to the Q1 level during '26 despite volume momentum. Turning to capital. We ended the quarter with a CET1 ratio of 14.3%. Given capital generation of 62 basis points in Q2 and 115 basis points in half 1 we have announced a $1 billion share buyback and an GBP 800 million dividend equivalent to 5.9p per share. Pro forma for the buyback, the CET1 ratio is 14%, consistent with our intention to operate around the top of our 13% to 14% CET1 range, pending regulatory clarity.

Attributable profit growth should continue to drive strong capital generation and EPS momentum, which we amplify through share buybacks. Group RWAs were stable at GBP 365 billion. Guidance for regulatory RWA inflation in '27 remains unchanged at GBP 19 billion to GBP 26 billion. This includes Basel 3.1 changes on 1 January and implementation of IRB in U.S. Consumer Bank, which we now expect in half 2 '27. Group Pillar 2A requirements are expected to reduce following each of these events, and we will provide further guidance as we get clarity. On the broader regulatory landscape, we note the recent financial stability report that believes more can be done to drive U.K. growth. Proposed leverage changes would reduce Barclays Tier 1 leverage requirements modestly by 8 basis points, supporting its position of the backstop measure. We continue to work closely with the Bank of England to promote international alignment and competitiveness of the U.K. financial services sector.

As usual, a word on our overall liquidity and funding on Slide 32. We have strong and diverse funding, including a 75% LDR and an NSFR of 136%. And we are highly liquid across currencies with an LCR of 158%. These measures reflect purposeful and prudent management of our balance sheet, delivering resilience, thus ensuring we have capacity to support customers in a range of environments. TNAV per share increased by 39p or 10% year-on-year to 423p. This mainly reflected organic earnings, which should drive the overwhelming majority of future keener growth. To summarize, operational progress since '23 continues to support strong returns and EPS growth, and we remain well placed to deliver all group targets for '26 and '28. Over to you, Venkat, for concluding remarks.

Thank you, Anna. We are continuing to build upon the momentum of our delivery in the first 2.5 years of our plan. We will further strengthen the foundations for an all other RoTE by accelerating investment and delivering operational progress. I will now open to Q&A. As ever, please limit yourself to 2 questions per person so that we can get around as many of you as possible. Please also introduce yourselves as you ask your questions. Thank you.

[Operator Instructions]

Our first question for today comes from Chris Hallam of Goldman Sachs.

Two questions from me. You talked about a commensurate improvement in group efficiency in 2027 from the GBP 300 million of additional FCA spend in H2. So could you comment then on how you feel about the GBP 18.2 billion of OpEx that consensus has in for next year? Does that feel too high or too low when you think about the SCA tailwinds on the one hand versus some of the higher compensation costs on the other hand.

And then second, on equities. I sort of I get the mid-40s print. That looks a bit low versus peers, but it's basically in line on a 2-year stack. I just wondered if you could give any color on sort of regional trends, growth in the U.S. and APAC whether -- how much that would have been higher versus what we see here in EMEA. And in financing, I was surprised that was flat Q-on-Q. It seems like prime was really strong across the street in the second quarter. So if you could unpack that financing sequential evolution a bit, maybe it's fixed financing versus prime, maybe its balance sheet discipline. Just anything you have to say there on that topic as well, please?

Okay, Chris, I will start, and then I will ask Venkat to make some comments. So what we have said is that we expect to take up to a further GBP 300 million of structural cost actions in the second half because we see compelling opportunities to get a good return on investment and drive a long-term sustainable returns of the business. In so doing, we expect a commensurate improvement in the growth efficiencies next year. Now what we haven't done is given absolute targets in costs. The way we think about costs is because returns are our North Star, cost/income ratio is our North Star. Because to the extent that the business is -- has a degree of momentum around it, and we may incur further absolute costs. So that's what's really important to us.

We believe that the cost income ratio in 2028 will continue to be a low 50s print and we expect 2027 to be a meaningful step towards that from the high 50s cost income ratio that we need -- that we expect in the current year. But fully expecting a commensurate increase in gross efficiencies, and you will see that coming through in terms of cost-income ratios. In terms of the equity print, that is very much driven by the investments that we have made in the business. What we see all the way across the investment bank is that we are growing in the areas that we expect to grow within. So particularly within equities, what you're seeing is a strong print in equity derivatives and also a strong print in Prime. We have some exposure to the Asian market through our prime business, where we're essentially satisfying the demand of our global clients. And we noted that about 80% of that growth is coming from our top 100. So it's just reflective of that global strategy. Venkat, anything you would add?

Yes. And I think just to add on to that, you should view this picture in terms of the longer term of what we said about the investment bank. So one is just starting big and then coming small. We said that we are going to operate with a stable capital base of around GBP 200 billion, give or take, and we've been there. Second is we expect would be a smaller fraction of the overall bank, which it is. Third, that we'd be increasing top line revenues, increasing returns, which means costs fall relative to revenues and increasing capital efficiency, and we've shown you a number of 7.7% return on RWA. So all of those things have been achieved over the full period, and I believe in 9 quarters out of 10.

Within that, we also said we will diversify the business, both in terms of stable sources of income versus intermediation and then the role of equities versus fixed income. So there are slides which sort of indicate that Page 41, for instance, shows you the rising stable sources of income from financing in the international corporate bank at the bottom. Equities is now 30-odd percent of the bank's revenue in the end markets. And that is to be desired. This is the house that fixed income built. I'm very happy and of saying, but it's increasingly the house on which equity on which we lean on equities. And as Anna said, the regional shift has gone towards a little bit towards Asia, helping our large clients access the Asian market. Our balance sheet has grown a little to take advantage of that. But you should continue to see this business operate with the principles in the guardrails, which we've set out 2.5 years ago. Stable capital, increasing capital efficiency, revenue improvement, disciplined cost management, higher returns and a more diversified business in terms of stable first sources of revenue versus intermediation, equities versus fixed financing versus the rest.

Our next question comes from Alvaro Serrano of Morgan Stanley.

I have 2. First of all, on deposit competition in the U.K., you call out sort of product margin being slightly weaker. Presumably, that's the ISA deposit dynamics. And the question is, is really -- do you -- what's the level of confidence that it's just the ISA season because loan growth is strong. Presumably, we've seen in other regions that are driving persistent deposit competition. But you're obviously confident because U.K. NII guy is pointing to 3% quarter-on-quarter growth run rate more or less for the next couple of quarters. So maybe some -- if you could expand on your confidence why this is transitional and NII should accelerate from here. and we shouldn't worry about that deposit competition dynamics? And the second question on U.S. Cards in the U.S. consumer business, consumer bank. I don't think I've heard it this Securitization margins, [indiscernible] but just want to expect as a run break going forward.

Okay, thank you, Alvaro. I'll start on both of those and then Venkat may have some comments on US. As we called out in our prepared remarks, we have seen a high level of deposit competition in the second quarter of the current year. You're absolutely right. That relates in large part to the ISA season. We saw an ISA season that was 7% higher than the previous year and very competitive in terms of its pricing. Now most of our maturities were actually in the first quarter. Most of the market maturities were in the second quarter. And that allowed us to somewhat stand back and price very selectively and use our premier proposition to really defend and maintain our market share, which is what we have done.

And about 85% of the growth that we've seen in the ISA balances year-on-year are driven by our premier customers, which is exactly what we want. So we think we've done a good job. But that said, you can see some marginal pressure in that product margin. We said that we expected that product margin cash impact to be broadly flat quarter-on-quarter, and you can see it was a little worse, and that's essentially down to that fact. As we look forward from here, we have confidence in the NII progression across Q3 and Q4. And if you recall what we said at the outset of the year, we felt that Q1 to Q2 would be a bit more muted. Initially, we said stable, then we expected a little bit of growth, which has clearly been somewhat challenged. But from here on in, we continue to expect growth. Why? Because in the second half of the year, we see card seasonality. There is a day count component. We have seen mortgage margins somewhat recover after the compression that we saw in the Q1 swap volatility. And very importantly, in relation to deposits, a couple of things.

Firstly, you've got the concentration of the ISA market behind you. But secondly, remember that term deposits are in large part 1-year products. And we saw the start of this more intense competition in the second half of last year. So as we go forward from here, what you're going to see is that the maturing margin and the prevailing front book margin are somewhat converging in the second half of the year. That was not true for the market in the first half. If pricing stays where it is, they'll be broadly neutral by Q4. So we're taking all of that into account, Alvaro, and we expect sequential growth in BUK NII into Q3 and then again into Q4. So moving into USCB. So in the quarter, we've seen 2 impacts that relate directly to the elevated level of rates versus what we expected. And I should say that the underlying business is performing as we anticipated. So we're seeing good underlying cards growth, particularly, for example, within our General Motors portfolio. We're seeing good volumes within Best Egg.

The NIM progressed to 13.2% as we expected. with the roll-off of AA. We do expect NIM progress from here, and I expect it to elevate into the third and fourth quarters. Because rates are a bit more elevated, deposit margins are a bit more compressed. And therefore, you might see that hold it back a little bit, but I do expect to see further progress from here. The more material impacts in U.S. cards are actually around non-NII, as you called out. And again, that's rates driven. And it's just because of the reference rate is a little bit higher than we anticipated, but APRs haven't really moved. The prices of those securitized loans going into the market is a bit compressed versus what we expected. But as we step back, Q2 has been a really pivotal quarter in terms of what we expect from this business on a go forward. Venkat, you might want to comment a bit more on that.

Yes. I mean, look, first, on this business, when we've been talking about this for a number of years, it was -- at its core, it's a partnership card model. But we've been building beyond that. First, we've been rebalancing it towards retail. That's on the top right of Page 28. The second is we've been increasing the amount of deposit growth, especially the retail side and as a share of total deposits. That's the bottom left and middle of Page 28. Third is we have built essentially a digital bank in the U.S. now with 25 million customers and not a single branch. It's got deposits, it's got cards and now with Best Egg direct-to-consumer loans.

And in a way, this part of the bank has been the leader for the bank in digitization, in efficiency, in harmonizing systems, all the things we are investing in and which some of our SCAs are about. And what you could see at the bottom right is the cost efficiency in that group, where the cost-income ratio is, I think, the best in the group at around 39%. And it allows 2 things. One is high cost efficiency. This is what we are trying to do everywhere. That's what the SCAs announced this quarter are about. Second, it allows us to bring in a lot of change quickly because of the tech platform. So we transitioned American Airlines. We've integrated Best, and we've announced a product launch on Samsung with both their card on the way to a digital wallet. So we are very ambitious about this part of the bank. And hopefully, you'll continue to see strong results coming from it.

Our next question comes from Guy Stebbings of BNP Paribas.

The first one was back on the U.S. consumer. It was obviously a lot going on in the quarter with AM Best Egg. I think you had previously said that the Q1 figure of 983 million with maybe a little bit of growth was sort of a reasonable gauge into Q3 and beyond. But I just want to check, I think you made an earlier comment on the call suggest maybe that wasn't the case. Can I just sort of check that comment you made earlier in terms of when we get back to that Q1 run rate.

I seem to remember at Q1 as well, you're talking about quite a lot of upside to consensus U.S. consumer NII. I think it's moved a bit, but maybe to reflect at all on where market expectations now sit for that business would be helpful. And then the second question was on cost investments. I mean, clearly, a very good revenue performance from helped by the IB is giving you that sort of extra capacity for investment. I appreciate you want to leave yourself scope for further investment here.

But as we look out to 2028 and the cost income, which you high sort of being the North Star, is your conviction sort of improving as to where you land within a low 50s cost income ratio given that incremental investment you're making? I'm just wondering if you kind of look at where market expectations and 54% were that sort of ambitious enough, if you like.

Okay. Thank you, Guy. So if you recall, and clearly you do, in Q1, I said I felt that Q1 was a good basis for subsequent quarters. I think given those 2 rate impacts that I've called out, it feels like it will take us a little bit longer to build back to that base guy. That's really what we're seeing here, both -- well, primarily in terms of those sold securitization prices. Although remember, as a bank, we do have some optionality here. So we have probably greater optionality than some participants in that market in that we can choose to hold some on the balance sheet if we feel that's the right thing to do. But as Venkat said, our conviction about this business strategically is completely unchanged by a quarter's rate expectations. And we still feel that we have the organic momentum in the existing cars business, Investec and in what we have announced in respect of Samsung. You might also respect -- remember that in Q1, I talked about a pipeline of future partners where we would bring everything into one place for them. And that's really what we were referring to when we reflect that some partnership more to go there.

In terms of NII in 2028, look, I'm not going to mark-to-market this every single quarter. What I would say is I made a comment. Clearly, analysts have responded. Thank you. And as I see the movement, I see it in the 2 particular areas that I called out at the time, one was U.S. cards and one was our U.K., one was our U.K. Corporate Bank. If I can move on to cost investments. I mean, as Venkat said, what we are focusing these investments on is exactly what we said we would do in our investor update in February. So it is around platform modernization. It's around process optimization, it's around change delivery modernization and in so doing, making the organization simpler on a permanent and enduring basis.

So clearly, what that investment does is it gives us greater confidence that we will be able to achieve our results in the short to medium term. So these are exactly the investments that we anticipated that we would be making. But 2 things have really changed since that investor update in terms of timing. The first is just the momentum of the earnings. I mean, our earnings per share are up 43% in the second quarter. And that allows us to make these investments while balancing our primary to commitments, which are progressive returns and progressive distributions. So ensuring that everyone is sharing in that momentum. And then the second thing is the more work we do, the clearer the view that we have on the opportunities that are in front of us to make the bank more efficient. And that's why we have the conviction in the ROI.

So from our perspective, it gives us more confidence about a RoTE target, which is open ended for 2028. And actually, just as importantly beyond that point because we said what we were doing here was somewhat deliberately not optimizing the short-term ROI of the business, but to be looking forward and creating yes, a progressive ROI pathway, but a sustainable and higher level of ROI in 2028 and beyond, what we called an all-weather RoTE. And so that's really what we're trying to achieve. But see it as more conviction in [indiscernible] and beyond?

Yes. I mean, look, just to add a few things, Joanna, First of all, absolutely, we have much more conviction today on the cost/income ratio target for 2028, which is in the low 50s. Second, as I said in the answer to the previous question, look at the U.S. Consumer Bank as a bellwether indication of how this works in practice for what happens is that we invest in technology and processes and systems, and you see a result in cost income ratio. So that's why we have a greater conviction.

Third, reiterate Anna's point. We are using the benefits of our higher returns over the last 2 quarters to invest in the things that we said we would. First, share the distributions with you, our shareholders. Second, of course, be well capitalized. Progressive returns to you, our shareholders. And importantly, to continue to invest in the business so that we can achieve these targets with greater confidence and speed, right? That's how you should read everything today.

Our next question comes from Jonathan Pierce of Jefferies.

I've got 2 questions, please. The first is really just a clarification of some of the answers you've given in the last 30 minutes on both net interest income and costs. On the NII, it sounded on from what you were saying as though USC forecast for 28 have maybe got to soothe right place, but the U.K. CB still a bit low. I know you don't want to be marking to market every quarter, but it would be helpful just to get a sense as to whether I've read between the lines correctly there.

And then on the cost income ratio, again, I totally understand you don't want to be bound to an absolute cost number next year, but consensus is at 55.5% on the cost/income ratio, that feels a meaningful step down from this year towards the low 50s in full year '28. Are you comfortable with consensus cost income ratio for next year. So sorry to focus on consensus and guidance. The second question is the dividend. Nice increase in the dividend in the first half. In the last 4 years, the first half dividend has tended to be 30% to 35% of the full year. Is that the sort of shape we should expect moving forward? Because if it is, is obviously pointing to a slightly higher dividend this year than consensus has got in and probably a little more than the GBP 2 billion that you talked about as well. So if you could help us with the shape of the dividend, that would be good things.

So Jonathan, let me take your first clarification points. So I'll just repeat what I said. I'm not going to market to market. Clearly, the analyst community has listened and we've seen a movement in that consensus for 2028. We have confidence in all of our businesses. and we have confidence in the U.K. consumer Corporate Bank as well as the U.S. consumer banks. So we've seen both of them move up. In terms of cost income ratio, Look, it's high 50s this year. Our expectation in the low 50s in 2028. We haven't given you any guidance at all for 2027, but what we are saying is that given that we are committed to progressive returns year-on-year and progressive distributions, you should expect us to be making a meaningful step between the high and the low position in 2027.

And then coming to dividends, you're right. Over the last few years, we've typically done 1/3, 2/3. We've made a deliberate shift towards a 40% to 60%. And the reason that we've done that is we feel it's more reflective of our U.S. and our European peers. And it is more consistent with our general desire to get distributions into the hands of shareholders more quickly see it as consistent with the move to the quarterly buyback. So what you should be expecting is that at the half year, we are at GBP 9 billion of our at least GBP 10 billion guidance that we gave you for '24 to '26. We paid GBP 800 million of the $2 billion dividend already. So you should be expecting 9 plus 1.2 plus another 2 quarters of buybacks. Clearly, we said our distributions would be progressive, and that's probably the limit of the guidance I can give you at this stage, Jonathan. But hopefully, you can see the conviction that we have around distributions, which are up 61% year-on-year.

Our next question comes from Benjamin Toms of RBC.

The first one is on PBWM. Net new AUM in PBWM in Q2 was relatively weak. Can you just give some color about what's impacting I think I was a little surprised my feeling was you've been quite active in trying to make your proposition more attractive in this space. And then secondly, on BUK, you spoke in previous quarters about your strong mortgage pipeline, have higher swap rates in the newsflow around the changes interchange stamp duty, albeit potentially changed overnight. Have they had much of an impact on your mortgage pipeline as we stand today?

Okay. Thanks, Ben. I mean there's nothing I would particularly call out on PBWM. I can hand to Venkat for what we've been doing there. But in absolute terms, these are not very large numbers, and therefore, they can be a bit lumpy. Clearly, we have ambition for this business for it to be much bigger. So you can get some lumpiness quarter-to-quarter. As we look over the first half in totality, it looks completely fine and actually broadly similar to the previous year. Let me just deal with mortgages and then I'll hand to Venkat on TBW and more generally.

Look, what we've seen is a strong quarter in mortgages. As I mentioned before, we've seen somewhat of a recovery in margins after -- in application margins in Q2 after the compression that we experienced in Q1. Actually, the gross completions were very strong. We had a GBP 10 billion quarter. That's the biggest quarter we've ever had in June, in particular, was a very significant month for us. So no signs as yet. There's real wage growth in the economy and good demand for mortgages as we see it across the bank. Our growth share has exceeded our stock share now for many, many quarters. And clearly, we have quite a breadth of proposition there with Kensington in place. The only thing I would call out is that we have seen a slight change, if you like, in the mix of what people are looking at.

So a couple of things. Firstly, people are remortgaging quickly. given, if you like, that uncertainty in the market. And secondly, we're seeing a move to lower tenors and more tracker products relatively speaking, just as customers are seeking to secure, if you like, a lower rate and a slightly more uncertain environment. So that's the only thing I would call out at this stage. Venkat?

Yes. Look, on TBW, of course, I'll reiterate what Anna said that you'll see, given the size of this business, some movement quarter-to-quarter. But I think, again, the broader picture here is very important. The overall returns of this business are affected both by the growth in the business that you see as well as our investment. Our investment comes not just in technology but in the way in which we are constructing products making them more accessible. Our broad goal for the wealth management and directed investing part of this, which is much more of the mass market in the U.K. is to make available low-cost, transparently constructed,, and fried risk-appropriate options to the investment public. We want them to invest in their financial futures.

And in this quarter, we've done 2 things to make that easier. One is that we removed custody pricing for custody charges for all customers in Barclays Direct Investing. So with that removal of custody charges, we've got the most competitively priced alternative for those who seek full service investment with the security of dealing with a large provider, particularly a bank. Another thing we did as part of our premier product in retail is that we've launched something called planning and advice, which allows Premier customers to access human-led advice through our app, again, with no upfront fee. So all of this is a form of investment in the future of financial planning, and we expect to see the results of this investment over time. But you're absolutely right to point out that this is an important area of focus here and hopefully, a long-term growth area for us.

Our next question comes from Chris Cant of Autonomous.

I just wanted to come back on the U.K. and PBWM, if that's okay. On the U.K. and the GBP 8.2 billion implied NII figure. I know you said middle of the 8.1% to 8.3% range, but let's just work with 8.2% for the sake of argument. Is that specifically assuming 3.5% swap reinvestment in the second half? Because consensus is about GBP 50 million higher on the full year, but it seems like maybe GBP 30 million of that is just consensus assuming a fore and change reinvestment rate and you perhaps sticking to the 3.5 planning assumption?

And also on this 8.2, if I think about the quarter-over-quarter kind of sequential growth, it looks like you're implicitly saying actually into the second half, the NII build is faster than consensus had in and that probably we get to the same 4Q exit run rate arguably higher if we trued up for swap investments. So that's on the 8.2%. And then just following up on the previous question on PBWM and your comments, Venkat, about the price point on direct investing, paying off over time. Can you just give us a sense of how you see this fitting into the broader customer strategy in the U.K.? Obviously, if you're not charging custody fees. I assume that the plan is not to kind of a custody fees back up at some point down the line. So is this really just trying to improve customer stickiness? Is that how that fits into your strategy of kind of rebundling the U.K. banking relationship now that you can cross-sell a little bit more without fear of regulatory appraisal and that sort of thing.

Is that how you see that playing into the strategy? Or is there some other revenue opportunity you're seeing, whether it's been sort of taking that first free advice further and ultimately getting some IFA fees on a recurring basis. I'm just interested to see where you see the revenue opportunity. It feels like a sensible thing to do from a broadening customer proposition perspective. But obviously, you're not making money on the custody. So where are you making money?

Okay. Chris, I will start, and then I will hand to Venkat. So at the beginning of the year, we gave you a range of 8.1% to 8.3% on the U.K. And we said that the reason for that range was actually around how we felt around the uncertainty on deposit dynamics in particular. All we're saying at this point in time is that with the ISA season behind us, given the pricing dynamics that I called out before, we are basically there's a narrowing range of outcomes in the second half and us focusing on that middle of the range reflects that and no more. In terms of the swap rates, we consistently apply a swap rate assumption of 3.5% to our structural hedge. We think that's the right sort of sensible basis for it.

You're correct. We have seen over the first 2 quarters, the actual rate of reinvestment being in excess of that. That has very little impact in the current year. However, it will increase NII in future years, and it will lead to a stronger tailwind beyond sort of length of this plan, if you like, beyond 2028. So I think we told you that we expected half of our income growth to be coming from the structural hedge between '26 and '28. Clearly, this will increase that conviction, and it will increase our conviction around the NII in 2027 and 2028. Venkat?

Yes, so first, it's a good question. I think the bottom line is we want to be able to serve our customers in the U.K. for the entirety of their financial needs. This includes deposits. This includes loans. This includes payments and of course, this includes investments. And in order to do that, we're going to do 2 things. One is to widen the base of your customers, and then the second is to broaden the products that you offer them. So the widening of the base of the customers you have seen with our investment in Premier and in fact, with our acquisition of GoHenry, which is for the next generation of our customers in the longer term.

And in terms of products, you've again seen into -- and by the way, the other widening the base was with Tesco and the acquisition of Tesco Bank. Widening the products, you've seen it with mortgages, Kensington mortgages. You've seen it with some of our credit card products like in Tesco and personal loans with Tesco, and now you're seeing it in investments. And in investments, again, think of it in 2 ways. There's self-directed investments, which is where we remove the custody fees, where we want people to come in and invest. And of course, we are still charged for transactions in stocks and ETFs. And then the second thing is to move on the journey of advice and guidance in your investment and which is what our planning and advice offering is, where again, if you're a premier customer, there's no cost to the upfront fee, but there will be other ways in which we can help you.

The idea behind all of this. is to make it low-cost, transparent, transparently constructed, transparently priced and then risk appropriate right tailored for people at different stages in their financial journey. And you're right. What happens, ultimately, if we think if this works is that a customer is there with Barclays for the entirety of their financial needs and that we provided to them safely, we provided to them efficiently and we provided them transparently and cost effectively.

So Chris, just before we leave you, just to put some numbers around it. I mean, we believe there are 400,000 customers within our the U.K. customer base, who would benefit directly from this kind of advice that Venkat called out. So clearly, that ability to connect them digitally, we think is an opportunity for us. And sorry, I didn't really answer you on the exit run rate. So I won't give you a specific, but what I would say is that if you look in the first half, the product margin impact on the NII bridge has been negative. What we expect in the second half is for it to be neutral to positive. So that would underpin that accelerating NII that you called out. But thank you for the questions.

Our next question comes from Edward of KBW.

I just had 2 questions. The first one, in terms of this additional investment in the second half, I think previously, you were committed to be U.K. costs falling every year for the next 3 years. I think that's the way you articulated it. Is that still your commitment? So even with that additional investment, will cost in BUK -- still be down each year for the next 3 years? That's question number one.

And then the second question was a slightly broader question. I get what you're saying about the NIM in the second half and the product margins will stabilize or improve a little bit. But if I look at the totality of Barclays NII, it seems that volumes have taken off way faster than, I think, certainly consensus and certainly I expected. But your NII guidance is broadly the same or even a little bit maybe a tad lighter which implies obviously that the margin is going to be lower than we were all expecting. Firstly, is that broadly a fair representation?

And secondly, are we talking about margins being there or thereabouts now going forward that I get what you're saying about the structural hedge momentum, that actually you're probably going to have to share if you're going to keep this sort of momentum growth in volumes, you're actually going to have to share most of that gain with customers going forward? If you're going to keep your share in the deposit market. Is that a sort of fair understanding?

Okay. Ed, let me start, and I will then pass to Venkat, if he's got any comments. So the answer to your first question simply is yes. So incurring additional structural cost actions and in incurring some costs in quite frankly, responding to regulation and getting to a more flexible pay mix for our MRTs. These are not permanent elevations in the cost base. That's not what they're intended to do. They are intended to drive the returns of the firm, and they are intended to create optionality and efficiency in the cost base.

For BUK, we still expect sequential falls year-on-year during this plan. And for the group as a whole, I expect positive jewels in every year of the plan. So that remains completely unchanged. That's what we meant when we said it's the momentum that allows us to do this without disturbing the commitments that we have to the outside world. And then on your second question, I think about it slightly differently, Ed. So we committed that we would put down GBP 30 billion of RWAs in the U.K. business growth across '24 to '26. And at the end of the second quarter, we are at GBP 25 million. That is exactly where we expect it to be. So the pathway between balance growth and NII growth is as we anticipated it. And the thing that's driving the growth in NII across Barclays is not price, it's capability build and that's true of every single product that we have.

So if you go to mortgages, it's Kensington and that's the mortgage portal. That's what's allowing to drive our market share up so that the gross share is higher than the stock share. If you go to cards, it's Tesco and it's the customer journey. If you go to corporate, it's about the capabilities that we put down in terms of speed to market, speed to lending. And I could go on, but this is capability led. It's not price led. So we don't feel like we are under margin pressure. Now that said, the U.K. market and indeed the U.S. consumer bank markets are extremely competitive, but they always have been. And there's no real intensification of that beyond the comments that I've already made. So we're confident in that progress because we feel it's being driven by capability builds. And quite frankly, in some areas, building back to a level of share that is more natural for us, particularly in something like corporate.

Could I just -- the only thing I would add is that, I mean, on your Slide 10, you show GBP 1.2 billion of additional revenue from the hedge. And yes, if I'm looking at your guidance, NII is not -- or banking and is not going to grow by GBP 1.2 billion. It's going to be somewhat less than that. So that would sort of imply that despite all the volume growth, the underlying NII, if it wasn't for the hedge, we wouldn't be getting really any NII growth at all. And I'm just thinking about what that means as we go beyond this year and into sort of '28, '29, '30, what's happening in terms of the underlying dynamics?

Well, I mean, this is clearly the gross hedge income. The other thing I would say is there is momentum from the structural hedge. We know that. That is somewhat enhanced by the fact that our deposit stability is there. And therefore, it's important that we grow the deposit franchise also. But the thing I would also say is look back over the last few quarters, Ed and add up what's coming in from the asset balance column in the U.K. And you will see that you are getting to a building momentum of asset income. I think you'll get to like GBP 130 million, GBP 140 million of additional income coming through in BUK alone on that metric.

Clearly, that is just building quarter in, quarter out. It's somewhat being led by mortgages. So the margin is going to be a little bit lower than the U.K. as a whole. If you go into corporate, it's exactly the same. The NII growth in corporate is being driven by lending as much as it's being driven by deposits. So -- and this is really important for the long-term balance of NII. Of course, at the moment, this is being disproportionately driven by the structural hedge. But at some point in the future, beyond 2028, it's really important that the diversification with the in NII comes through, and those asset balances start to carry that momentum from there on in. That's what we're very much focused on.

Our next question comes from Andrew Coombs of Citigroup.

One follow-up on the structural cost actions and then a first question on the Investment Bank, please. On the structural cost actions, you've talked about a commensurate improvement in 2027 efficiency. So is it fair to assume that these investments are more focused on the cost side as opposed to revenue growth ambitions? And linked to that, in your prepared remarks, you talked about the FCA in the U.K. You talked about higher cost income in PBWM. So is it fair to assume that's where the bulk of these structural cost actions are being deployed is in the U.K. businesses?

And then my separate question on the Investment Bank Obviously, a very strong quarter for advisory, for ECM, for equities is something we've seen from your peers as well. Perhaps I could just invite you to talk a little bit about the sustainability of that industry wallet and comment on the AI CapEx up cycle, where we are in that and how that impacts on your thinking about the wallet opportunity going forward?

Okay. Andy, I'll take the first one. I'll take the first one and then Venkat will take the second. I mean, structural cost actions are focused on the cost base of the firm and improving the efficiency and the effectiveness and the cost income ratio of the firm. I'd encourage you to think of structural cost actions as one of the investment options that we have. We're clearly investing in driving the revenue. And we take the same approach here. We have the same degree of focus on the ROI here. But you're correct in that it will be it's focused on driving the growth efficiencies, i.e. it's entirely cost related. But it is one of many actions that we take in respect of investment, and we think of it no differently.

I wouldn't think of it as particularly skewed to the U.K. You should expect it to be more broadly focused across the organization, given what it relates to because it relates to platforms, it relates to processes, it relates to change agility. That is relevant for every part of the bank. We will come back to you on the split as we have that detail. The additional costs that we talked about in respect of -- so the 150 -- well, GBP 100 million to GBP 150 million, I would expect that to be more disproportionately focused on the investment bank. But note on the Investment Bank also because of the momentum there, we are repeating our guidance both for RoTE and for CIR for the year. Venkat?

Yes. And on the investment bank, you're right that we are seeing fairly good momentum across the piece of the investment bank. I think AI CapEx through the cycle -- so it's a bit of a tough question, especially in the kind of environment in which we find ourselves. But I think over the long term, we're going to see investment in 2 parts. We're going to see investment in people building up their systems and their processes to take a full advantage of AI. Because you get the best outcomes that you've got efficient compute platforms, merchandised databases and the like. And you will see that and then, of course, on the use of tokens.

And in the tokenomics of this, some amount of efficiency will have to take place where people distinguish between different types of languages, different forms of token usage and the ways in which it is put to work. As far as our own share through this, we've had a prominent role in some of the very large debt offerings that some of the U.S. hyperscalers have made. We continue to advise many of them on -- in an advisory way and on capital planning and expenditure. I think -- it is an -- and then there's, of course, all the ancillary stuff that comes into the industrial sector, including power and grid and construction. And we've got a fairly good industrials practice. So you should expect us to continue to play a prominent role there.

And Andy, if I might just add, of course, we want to be able to take advantage of the cyclical opportunities in front of us. But it's really important that we continue to keep that structural discipline around the IB, which you can see us doing quarter out. With that, I might just go to the next question, please.

Our next question comes from Amit Goel of Mediobanca.

I've got 2 questions. So one -- just coming back on the additional SCA. I was actually a bit surprised by the 100% return on investment. So I just really wanted to understand a bit better, like if the returns on that type of investment are so high, why wouldn't -- wouldn't the group be doing that kind of investment in any case? And why limited at the amounts being done, why not more?

And then secondly, in terms of US CB, just trying to understand also the split or the expectation then for the NII versus the non-NII as we look forward. Because if I understood from the call, the NII is in broadly the right place now, I think previously, you mentioned Q1 that you'd expect it to the non-NII to build to about 20% of total income. And I think consensus is now actually at 24%. So I'm just kind of wondering whether you also think the non-NII expectation going up to '28 is also a little bit too high at the moment.

Okay. Thank you, Amit. Why don't I take those questions. So on the first one, this is a plan of balance. We're trying to get a balance between progressive returns progressive distributions and investments in the business. And you can see that balance in the first half. You can see that RoTE is 14.8%. You can see the EPS growth. You can see the growth in the distributions that I called out before. So we're really trying to ensure that if you like, everybody shares in the momentum of the bank, and that's really important. And it would be just as easy for us to not make those investments at all, but we don't think that is the right thing for the long-term returns and the sustainability of those returns as we look out to 2028 and beyond.

So for us, it's really a balance. We do -- as we look at these investments, we do feel like it's the right time for us to do it. In part, because of the momentum that we see that allows us to undertake them without disturbing our commitments to the outside world. But also that we have businesses that are primed for change. And they are able to absorb that degree of activity, as Venkat called out before using USCB, as an example. And clearly, we have a degree of execution discipline now that we've demonstrated over the last few years. So we think it is the right time to do it. And as we go through the plan, you will see a balance of investment in the top line, investment to drive efficiency in this way, while still delivering progressive returns and progressive distributions.

In terms of USCB, Look, we're trying, I guess, to focus more on total income in this business because addition of Best Egg does make it a bit more of a complex mix I think we get to 20% eventually. But clearly, that's going to take some time for us to build because what we are doing is we're originating balances through Best Egg and we're building up managed portfolio, if you like. But in terms of the overall income trajectory of that business, we have considerable confidence in it for all of the reasons that Ben had outlined. Okay. Thank you, Amit. Perhaps the next question please.

Our next question comes from Perlie Mong of Bank of America.

So we've talked a lot about cost. So it sounds like you want to balance between distribution growth various different things. Well, but I think at this point, so it looks like in the guidance, income is now GBP 500 million higher, and incremental cost is GBP 450 million higher. So if there is another quarter of very strong IB income, et cetera, would a lot of these incremental income be just spent on -- as because obviously, if you are having opportunities to invest in things that to give you 100% ROI, that probably suggests that you have many other opportunities to invest and improve the long-term efficiency of the company. Is that the right way to think about it? Obviously, distribution probably not in a bad place already, you're already on track to meet all of that. So that's that.

And then the other question is just quickly on deposit mix in the U.K. does look like there's a bit more of a shift towards time deposit? Is it just a function of the is seasonality? Or is the fact that the market is a bit more competitive and therefore, rates a bit higher? And I suppose if you look at the swap rates looks to be probably staying higher for a period of time. Would we expect -- should we expect a little bit more mix shift towards time deposits from here?

Okay. Thank you, Perlie. Let me take those. But what we're saying on FCA is that we normally do GBP 300 million. We've actually undertaken about $100 million in the first half. That means that in ordinary course of business, we'd be telling you we expect to spend about GBP 200 million in the second half. Actually, we've added up to GBP 300 million to that. So we're talking about undertaking around GBP 0.5 billion worth of structural cost actions in the second half. In terms of an operational list, and the level of investments that we can deploy wisely on behalf of the shareholder -- we think that's the right sort of level. So clearly, as we look forward from here, Venkat and I have at least as much confidence in the RoTE of the firm as when we started the year for 2026.

And you can see that in the fact that we have upgraded our income twice first at 31 and then to the circa 31.5%. So we think the momentum is in the business. But this will be a big operational lift for us in the second half, and we are very focused on ensuring that we deploy that absolutely wisely. So yes, that's our primary objective here. And then in terms of your second question. Look, our current accounts are broadly stable. We are, if anything, slightly better than the market. What we're really looking at here is some churn within the time deposit market and customers seeking yield. As we say, we feel like we've progressed through the ISO market well. I think what's really important because we've had some comments this morning about the structural hedge in relation to this. So what's really important for the structural hedge is to realize, number one, the structural hedge in no way relates to time deposits. They are, by definition, interest rate sensitive and are excluded from the hedge.

So all of this churn has no impact on that for us or indeed for others. It's really the stability of the relationships overall and the current accounts. So everything that we see in the deposit market is very rational from customers and doesn't undermine our long-term expectations in terms of NII.

Our next question comes from Nicolas Payen of Kepler Chevreaux.

I have 2 questions, please. The first one is relating to the structure. You mentioned that expect the structural hedge income to growth to continue beyond 2028. So I don't know if at this point you can share anything regarding maybe the maturing yields beyond 2028? Maybe the kind of margin growth you expect beyond that -- that would be the first question. And then the second question would be on your partnership in the U.S. with Samsung. Is there anything you can say maybe regarding the marginal contribution that you expect from this partnership on, let's say, 2 to 3 years basis?

Okay. Nicolas, I feel we're going to just point you on both of these answers in respect of the detail that we will give. So we haven't given any detail on maturing yields beyond 2028. Of course, we will do that in time. The only thing I would just anchor you back to is the fact that we are planning this on a, we think, a very realistic basis at 3.5%. The fact that we have somewhat elongated the longevity of the swaps that we are putting into this hedge reflecting the length and the stability of the relationships that we enjoy across the bank. And it's those 2 things that we feel will carry the momentum beyond 2028. I'm just -- we're just not in a position to give you that maturing yield at this point in time, although we will do at some point.

And in terms of the partnership on Samsung, we don't actually call out the economics of any individual partnership. But I think to Venkat's earlier points, this is one in which we are very excited. It's a de novo partnership, so it starts from 0. And what you're seeing is the fact that we have built a digital card capability in order to bring this partner on board. And you should expect us to continue to build out the kind of capability that you would see in another digital wallet.

Yes. I mean, think of this as more about a statement of capabilities. In 2 ways, one is our ability to do this relatively quickly at a time when we were doing lots of other things like Best Egg and American Airlines. And the second, what this means because as Anna just said, it is a card capability later into a fuller digital wallet on the Android ecosystem, a important player in the Android ecosystem and one of the world's leading tech companies, which is well known for its very high standards. So that kind of a partnership is demanding of us and but it also makes us much, much better, not just here, but more broadly. So it's a capability extension and hopefully, a financial expansion as well as that you'll see over time.

Thank you, Nicola. Perhaps we could go to the next question, which I believe is a final question.

Our final question for today comes from Alberto Artoni of Intesa Sanpaolo.

Just have one last. Just one clarification and cost. Apologies for coming back on the topic. Given that your structural cost actions are going to be accelerated in the second half of the year. Just wanted to understand if that means that going forward, 2027 and 2028, you will have lower investments, lower structural costs because you just brought this to the second part of 2026, are you just accelerating and shifting this cost in the second part of '26? Or you're just increasing the amount of investment just because the opportunity is there for doing that?

Okay. So don't think of it as an acceleration. Think of it as more, and I mean on both sides. So we are just for the current year, we have increased or we expect to increase our spending on structural cost actions but you will also note that we have increased our expectation of gross efficiency saves over the entirety of the period. So we're now saying that it was GBP 2 billion. Now we're saying we expect to generate more than GBP 2 billion of gross efficiency saves during that period. So from our perspective, you should expect us to continue to balance returns, distributions, and investments, both in terms of the top line and efficiency.

So clearly, our priorities remain as they were, regulatory capitalization followed by distribution followed by investment in the business. If we see good opportunities to invest, where we feel that is the right thing for the shareholder, we will do that. But don't think of this as instead of '27 and '28 is additional, but only because we have certainty that we can deliver the right returns.

A quick follow-up on the -- because the guidance for 2028 has not been changed, if I got it right. So it means that you have more -- but you talked about having more confidence. So I mean, this type of investment that you're making that you plan to make additional investment that you plan to make will increase the -- your confidence in your ability to deliver the results. Is that the way to read this process?

Yes. Increase confidence.

Look, thank you very much. We appreciate the time and the attention you've given. We look forward to meeting some of you on the road in the next few days. What I would say to sum up is when you look at these results in a whole, we are 10 years into the plan we announced in 2024. We're 2 quarters, 10 quarters into it, 2 quarters into the plan we announced earlier this year in every quarter, in every way, cumulatively and individually, we've been meeting our guidelines. Sometimes a little more than others. But generally, it's been a part of progress in returns, a pause of progress in distributions, a positive progress in efficiency in the bank in and in our capabilities in the bank more broadly. We are a bigger part of the U.K. ecosystem than we were. We maintain our strength and a bigger part of the global ecosystem, especially in equities and financing, as we've spoken.

We are using the enhanced the increased revenues from this first half to, a, increase distributions to our shareholders; b, to continue to remain safe and well capitalized, and c, to invest in our business, right, for the long-term benefit of this business, both in terms of the revenue capability, the cost efficiency and the ability to bring better products safely and quickly to our customers. And we want to do, as we said, in the U.K. on the entirety of the customer experience and continue to be -- to create an important part and a growing and important partner to our institutional clients worldwide. Thank you. A good day.

This concludes the Barclays Half Year 2026 Results Analyst and Investor Conference Call. Thank you all for joining. You may now disconnect your lines.

Welcome to Barclays' Q1 2026 Results, Analysts and Investor Conference Call. I will now hand over to C.S. Venkatakrishnan, Group Chief Executive, before I hand over to Anna Cross, Group Finance Director.

Good morning, everyone. Thank you for joining Barclays' First Quarter 2026 Results Call. In February, I shared our vision for 2028 and beyond, and this was to deliver a better run, more strongly performing and higher returning Barclays. This represented an intensification of the strategy, which we put in place in 2024. The first quarter results demonstrate the benefits of the structural improvements that we have been making in the last 2 years.

These improvements allowed us to capture opportunities within each of our 5 divisions and particularly in the investment bank. The diversification of our income, the strength of our client relationships, the ongoing delivery of operational efficiency all underpins my confidence in achieving each of our 2026 and 2028 targets. We have delivered a group RoTE of 13.5% in the quarter.

This demonstrates resilience through a period of elevated volatility and incorporates one-off impairments and charges. We grew the top line by 6% to GBP 8.2 billion, supported by NII growth and strong activity across the Investment Bank. We improved the cost-to-income ratio to 56%. RWAs in the Investment Bank increased modestly versus the fourth quarter to facilitate cyclical activity with income surpassing GBP 4 billion for the first time.

Consistent capital generation and a 14.1% CET1 ratio supports our plan to return at least GBP 15 billion to shareholders by 2028, including today's GBP 500 million buyback announcement. While the external environment has changed, we remain true to our purpose, which is to work together with our clients for a better financial future. We remain committed to deploying lending and risk-weighted assets in our U.K. businesses.

We do not currently see any credit weakness in the U.K. or in our U.S. consumer business nor in corporate lending. U.K. household and corporate balance sheets remain robust and clients are behaving rationally. And payment rates across customer cohorts in our U.S. consumer bank remains stable. However, as you would expect, we are vigilant about the inflationary impact of rising energy prices and the consequent potential decline in consumption and growth.

This quarter, we have provided additional disclosures on our exposure to private credit and nonbank financial institutions. This is on Slides 45 and 46 in the appendix. I am disappointed to recognize a GBP 228 million single name charge in the first quarter. This was in our securitized products business and relates to a well-publicized sophisticated fraud.

This fraud, as with the one in tricolor indicates to us the importance of strong financial controls at borrowers and the difficulty ex ante of identifying fraud. As such, we are constraining lending to certain structured finance counterparties who operate more vulnerable business models and cannot convince us of the quality and independence of their financial controls.

These entities neither represent material exposure nor a material source of foregone income, but their risk far outweighs any reward. Separately, in view of increased macroeconomic and business uncertainties, we are reducing our exposure to more highly leveraged non-investment grade corporates, which we believe could be vulnerable to a weakening economy.

All divisions generated double-digit returns, including a RoTE around or above 20% in our U.K. businesses, and the U.S. Consumer Bank and the Investment Bank delivered 18.8% and 15% RoTE, respectively. We are achieving stronger structural returns by delivering operational improvements and better customer sets. In the first quarter, we achieved approximately GBP 150 million of gross efficiency savings towards the GBP 2 billion target over 3 years.

This quarter, we have enabled all corporate banking clients on iPortal, which is our single management platform, and this replaces 5 previously separate platforms. And in the second quarter, we will launch Premier Wealth Management in Barclays U.K. app to provide human-led digitally enabled planning and advice and support fee growth beyond 2028. The momentum of our progress underpins my confidence in delivering all our financial targets including a RoTE of greater than 12% in 2026 and more than 14% in 2028.

Anna, over to you now to take us through the first quarter financials in more detail.

Thank you, Venkat, and good morning, everyone. Slide 4 summarizes the financial highlights for the quarter. Before going into the detail, I would remind you that the weaker U.S. dollar versus Q1 '25 reduced our reported income, costs and impairments. Return on tangible equity of 13.5% was lower year-on-year, with stronger absolute earnings offset by 8% growth in tangible equity. Profits before impairment increased 8% as we grew income and delivered positive operating jaws. This was offset by higher impairment charges with profit before tax up 3%.

Earnings per share increased by 8% to 14.1p supported by share count reduction. Operational momentum continues, and we remain focused on execution. Income in Q1 increased 6% year-on-year to GBP 8.2 billion. Stable income streams grew by 7% reflecting 4% growth in the retail and corporate businesses and a 23% increase in financing within markets. Overall investment banking income was up 4%.

This top-line momentum increases our confidence in delivering the circa GBP 31 billion group income target in '26. Group NII, excluding IB and head office, increased for the eighth consecutive quarter and by 12% year-on-year, reflecting 3 factors: First, stable deposits across the group supported structural hedge growth at yields above our planning assumption; second, continued lending momentum; and third, improvements in U.S. consumer banks funding, mix and pricing.

We, therefore, remain confident in delivering full year guidance for group NII of more than GBP 13.5 billion, including GBP 8.1 billion to GBP 8.3 billion in Barclays U.K. As a reminder, the hedge is designed to reduce income volatility and manage interest rate risk. We have now locked in GBP 18.3 billion of gross structural hedge income across '26 to '28, up from GBP 16.8 billion at the end of '25. The hedge notional increased by GBP 6 billion versus Q4, reflecting stability and growth in our deposit franchises and equity.

This improves long-term NII stability but does not materially increase '26 income given the unhedged balances were previously earning base rates. We invested new and maturing hedge assets at around 3.9% in the quarter. This is above the circa 3.5% planning assumption that underpins half of the group income growth that we expect by '28. While persistently higher swap rates would support additional income growth, any benefit would build progressively noting that 95% of '26 hedge income is already locked in.

Moving on to costs. The group cost-to-income ratio improved to 56% from 57% a year earlier. We delivered circa GBP 150 million of gross efficiency savings on track for the circa GBP 2 billion target over 3 years. Investment costs increased by around GBP 100 million year-on-year, consistent with our plan. Q1 costs also included a GBP 105 million motor finance provision. This is booked in head office, given that we exited this business in 2019.

Our GBP 430 million cumulative provision is based on a single scenario aligned to the FCA's revised industry-wide redress scheme. This assumes a greater number of eligible cases versus the previous probability-weighted estimate and a higher cost per claim following increases to the compensatory interest rate. Inclusive of the motor finance provision, we remain well positioned to deliver the high 50s cost-to-income ratio target in '26. Turning to impairments. The Q1 group impairment charge of GBP 823 million equated to a loan loss rate of 74 basis points. This includes the GBP 228 million well-publicized single name charge in the investment bank, which Venkat discussed.

As a result, we now expect a group loan loss rate around the top of the 50 to 60 basis points through the cycle guidance in 2026. U.K. and U.S. consumer and corporate balance sheets are robust with a low and stable delinquencies and rational borrower behavior and the overwhelming majority of the investment bank's wholesale clients are performing as we expected. As an accounting matter, IFRS 9 models are procyclical and sensitive to changes in consensus economic expectations.

In the quarter, we have made 3 post-model adjustments that amount to a net GBP 20 million increase for the group. First, we released the post-model adjustment for U.S. tariff uncertainty from Q1 '25 in the investment bank and U.S. Consumer Bank. Second, we made a post-model adjustment in the investment bank to recognize downside bias due to uncertainty. Third, we adjusted U.K. and U.S. consumer impairment model inputs to reflect a more prudent view of consensus economic forecasts, including 5.3% U.K. unemployment versus 5.2% previously.

The Barclays U.K. loan loss rate was nevertheless in line with the circa 30 bps guidance we gave in Q4. Focusing on the U.S. Consumer Bank where consumer behavior remains resilient, as we show on Slide 42 in the appendix. 30-day and 90-day delinquencies increased modestly to 3.1% and 1.7%, respectively, mainly due to the seasoning of the General Motors portfolio, which will normalize in future quarters.

Looking ahead, we expect the American Airlines portfolio exit in Q2 to increase 30-day and 90-day delinquency rates by circa 30 bps and 20 bps, respectively. The Q1 loan loss rate fell to 491 basis points, reflecting better-than-expected credit quality of the GM portfolio and the net PMA release. As a reminder, we expect a circa 550 basis points loan loss rate in '26.

Turning now to U.K. lending. U.K. lending grew 5% year-on-year, consistent with the '25 exit rate and the more than 5% CAGR we expect from '25 to '28. We remain on track to deploy circa GBP 30 billion of U.K. business growth RWAs by the end of '26 having deployed GBP 22 billion since '24. We grew mortgage lending by GBP 1.7 billion. Completions moderated versus last year's elevated level in the run-up to stamp duty changes in April 25.

Application volumes increased materially as customers sought to lock in rates in a volatile environment, facilitated by broker platform improvements and Kensington. We also added 364,000 new card customers in the quarter and grew balances 8% year-on-year. Core Business Banking grew for a fifth consecutive quarter, while U.K. corporate loans grew for a sixth consecutive quarter and by 15% year-on-year, split evenly between new and existing clients.

Turning to Barclays U.K. in more detail. You can see financial highlights on Slide 13, but I will talk to Slide 14. RoTE increased year-on-year to 19.7%. NII of GBP 2 billion increased 9% year-on-year and fell 1% quarter-on-quarter as guided. This mainly reflected 2 fewer days in Q1 versus Q4 with NIM stable. Lower product margins reflect deposit mix and pricing and part of the circa GBP 100 million headwind that we guided to at full year. We now expect NII to increase quarter-on-quarter from Q2 with year-on-year growth in every quarter.

The Q2 product margin impact will be broadly similar to Q1, and I expect additional structural hedge income following the increase in notional that I referenced earlier. Non-NII increased to GBP 272 million, with the Q2 level expected to be around GBP 250 million following a securitization in April. Cost of GBP 1.2 billion increased 5% year-on-year due to structural cost actions, which we expect to be weighted to half 1 in contrast to last year.

We expect half 2 costs to be below half 1, supporting lower costs in '26 versus '25 and a low 50s cost-to-income ratio. Moving on to the Barclays U.K. balance sheet. Deposit balances were seasonally lower versus Q4. Wage growth supported stable current account balances despite seasonality. We took share in ISAs, pricing selectively in a competitive market, including to attract and deepen premier customer relationships.

Lending grew for the seventh consecutive quarter and by 4% year-on-year. Moving to the U.K. Corporate Bank. Q1 RoTE increased to 19.9%. Income grew by 10% and costs fell 2% and the cost-to-income ratio improved to 48%. NII increased 15%, driven by volume growth and additional structural hedge income with a fall versus Q4 mainly due to day count.

Strong lending momentum continued and supported deposit growth of 3% year-on-year and a loan-to-deposit ratio of 35%, up 4 percentage points versus Q1 '25. As Venkat referenced, all U.K. corporate clients are now enabled on iPortal with full migration expected during 2026. This will improve efficiency over time and broaden product usage, supporting fee growth beyond '28.

Turning to Private Bank and Wealth Management. Q1 RoTE was 25.5%. Income was broadly stable, while costs increased 9% year-on-year as we accelerated investment, which we expect to build quarter-on-quarter through '26. We added GBP 1.5 billion of net new AUM in the quarter. Despite adverse market valuation effects in Q1, AUM increased by 8% year-on-year, and client assets and liabilities grew 5%. We expect new capabilities and products such as the Premier Wealth Management service launch in Q2 to drive growth over time.

Turning now to the Investment Bank. Our strategy in this division is to drive consistent returns through RWA discipline, income stability and operating leverage. That remains unchanged. We have now delivered 8 consecutive quarters of year-on-year income growth, RWA productivity improvements and positive operating jaws. Targeted investments have improved the diversification of our income, which I will return to.

And we are increasing the durability of returns by growing more stable income streams in financing and International Corporate Bank. These structural improvements enable BIB to participate in stronger seasonal and cyclical activity in Q1. We grew RWAs by 3% versus Q4 to support this activity. We did this in a disciplined way with income to average RWAs increasing to 8% and no increase in risk appetite as we show on Slide 38 in the appendix. Investment Bank RoTE was 15% in Q1. Lower returns versus last year reflect the GBP 228 million single name impairment charge and to fair value move in the corporate lending line, GBP 105 million gain on leveraged finance last Q1 versus GBP 40 million of marks this Q1.

Operational performance was as we would have expected given the environment with income growing by 4% year-on-year. We performed well in areas of historic strength with investments supporting growth and diversification as we planned. This includes growth in advisory and ECM with around 3/4 of fees in the quarter earned in the U.S. and equities, which account for 28% of income versus 22% in '23.

In the International Corporate Bank, U.S. dollar deposits grew by 21% year-on-year, and we continue to expect the ICB to become a larger part of the IB by '28, reflecting ongoing investment in transaction banking. Using the U.S. dollar figures, markets income was up 13% year-on-year. Equities and FICC grew 23% and 8%, respectively. We saw particular strength in equity derivatives and prime alongside strong credit and securitized product trading in FICC.

Intermediation activity grew 6% year-on-year, while financing income grew 31% and for the seventh consecutive quarter. This reflected growth in client balances, particularly in prime, including strong growth in Asia. Investment banking fees increased 25%. The strong pipeline we discussed at the full year, and improved deal economics supported 89% advisory fee growth. We took leading positions in 3 of the 4 largest global deals in Q1, and the M&A pipeline remains robust with the share of announced deal volumes due to complete in '26, increasing year-on-year.

ECM fees increased 38%, and we have a solid IPO pipeline for the rest of the year. Turning to the U.S. Consumer Bank. Operational performance is on track, and we expect further progress following portfolio changes in Q2. We grew receivables by 9% year-on-year. Half of this was organic, with the remainder from the addition of GM, rebalancing the mix of assets towards retail.

While the accounting changes I outlined at the full year explain most of the increase in NIM versus Q4, pricing, asset mix and funding continue to drive improvements. We are pleased with the ongoing pace of retail deposit gathering, where balances increased 8% quarter-on-quarter and 52% since end '23. The improvement in ROCE to 18.8% reflected this operational progress. Returns also benefited from a full quarter of income from the AAA portfolio without the associated marketing costs. In U.S. dollar terms, income grew 21% and costs were broadly flat.

We continue to expect a mid-40s cost-to-income ratio in '26. Given portfolio changes in Q2, let me help with some modeling points. The exit of AA, which we completed on 24th April will increase NIM to more than 13% for FY '26, approaching 14% in half 2. This will more than offset an expected increase in the loan loss rate to circa 550 basis points for '26 as guided last quarter. Total income in Q1 provides a good starting point for the rest of the year with a loss of AA income largely offset by the addition of Best Egg and some business growth.

Income in Q2 will include a circa $300 million gain on sale, less than prior guidance of circa $400 million given lower balances at the point of sale. In addition, we expect incremental monthly costs of circa $45 million from Best Egg, which we expect to complete in early May. All in, we continue to expect a circa 12% RoTE for '26, excluding the AA gain on sale. We ended the quarter with a robust CET1 ratio of 14.1%, consistent with our intention to operate around the top of our 13% to 14% CET1 range.

Strong organic capital generation of 53 basis points was in line with expectations, supporting distributions and balance sheet flexibility to invest in market opportunities. The GBP 500 million share buyback for Q1 and GBP 500 million accrual towards this year's GBP 2 billion dividend are both as planned. RWAs increased GBP 8 billion quarter-on-quarter, including GBP 2.7 billion of growth in the 3 U.K. businesses. Excluding FX, Investment Bank RWAs increased GBP 3.3 billion to support the stronger activity that I referenced earlier.

As usual, a word on our overall liquidity and funding on Slide 29. We have strong and diverse funding, including a 75% LDR and an NSFR of 135%, and we are highly liquid across currencies with an LCR of 165%. These measures reflect purposeful and prudent management of our balance sheet, delivering resilience, thus ensuring we have capacity to support customers in a range of economic environments.

TNAV per share decreased 4p in the quarter but increased 33p year-on-year to 405p. Attributable profit added 14p per share in Q1. This was partially offset by the 6p final dividend paid on 31 March versus April in prior years. Higher interest rates reduced the cash flow hedge reserve, driving an 11p reduction in TNAV versus Q4.

This is a timing matter and will unwind positively through to 2028 or if interest rates revert to lower levels. TNAV per share growth from Q2 will be overwhelmingly driven by earnings, assuming broadly stable long-term interest rates from here. To summarize, operational progress since '23 provides a strong foundation to deliver all group targets in '26 and '28 in a range of environments. Over to you, Venkat, for concluding remarks.

The momentum of operational improvements, which we have delivered during the first 2 years of our plan have continued during the first quarter of 2026. While the environment has become more uncertain, the strength of our businesses and the diversification that they provide allows us to navigate volatility while delivering our plan and targets. I'll now open to questions and answers. [Operator Instructions] Please also introduce yourself as you ask your questions.

[Operator Instructions] The first question goes to Alvaro Serrano of Morgan Stanley.

Alvaro Serrano from Morgan Stanley. Venkat, maybe this one is starting for you on -- you made the comments that you've reduced the risk appetite or pulled back. I can't remember the exact words you used on slightly higher leverage and some structured products. Can you give us a bit of more color of the concrete measures you've taken and maybe speak to Slide 45, and thanks very much for that disclosure in which areas you've pulled back a bit?

And should we think about any impact on revenues from that sort of reduced risk appetite? And the second question is on the U.K. or broadly NII outlook. Obviously, rates are higher now. and you've locked in an extra -- in the outer years, extra sort of hedge income as you've disclosed and spoken to. When you think about the high yield versus potentially slowdown in loan growth and volume growth, do you think there's upside to NII if you were to mark-to-market sort of the current curves, maybe you are more thinking on flexing your NII guidance?

Yes. Alvaro, so let me start with your first question, and I'll hand it over to Anna for the second question. So we said in the statement that the impact is not material, either today or foregone income in the future. And where it would be on Slide 45 is basically in that third box, which says other commercial and consumer. That's where you're likely to see the GBP 17 billion.

That's where you're likely to see lending to business models that are basically themselves asset-backed lenders and who are more vulnerable business models and where we may not find the strength of financial controls we'd like to see them demonstrate. That's really the place where in the structured financing exposure, we would expect to see some limitations. But as I said in the prepared remarks, it's not material now as a source of income nor foregone income in the future. Anna?

Thank you. Thanks, Alvaro, for the question. Given the experience that we've had in Q1, we are more confident now on NII than we were at the full year because the actual experience that we've had in Q1 is either positive or neutral. And I'm very comfortable with consensus for '26, both for the group and for Barclays U.K. As I look a little further out into '27 and '28, that consensus looks light. We said the same at full year. It looks very light in '28. So what we've observed in Q1 is actually a good deposit performance.

So current accounts in BUK have been broadly flat. Ordinarily, we would see a seasonal decline in Q1. We've had a good ISA season where we grew faster than the market. You can see good lending growth across the piece, 5%, pretty much on the target that we've given you. Our USCB NIM is a little higher than we guided to at 12.8%. And of course, as I said, we've topped up the hedge by GBP 6 billion, and we've rolled it in the quarter at around 3.9%. Now this change in rates is really about the future years.

We are still basing the guidance that we're giving you on 3.5%. To the extent that we see rates remaining higher, obviously, that will build through time, and you'll see the impact a little further out. And I'd just remind you that our hedge income for 2026 is 95% locked in already. So our confidence is really coming from the real factors that we see in both deposits and in lending. To your point about slowdown in lending, we have not seen a slowdown in lending.

We see it growing strongly both in BUK across the products, also in corporate. And for the first time, we're seeing some really good signs of growth within business banking. That's driven by our own actions. We're not reliant on the market. So at this point, I wouldn't say that we would adjust our NII guidance for any change in lending. It's more the experience that we've had in Q1 just gives us greater confidence to deliver those consensus numbers.

The next question goes to Perlie Mong of Bank of America.

A couple of more questions on NII, please. So the product margin side of things, can I just dig a little bit deeper in that? So I think previously, you said that the mortgage compression from the COVID era mortgages rolling off would be about GBP 100 million. Is that -- are we -- how far are we in that? Because presumably, as you said, some of the volumes that might be rolling off in Q2 probably got pulled forward in Q1.

And then with swap rates volatility, can you comment on what you're seeing in terms of front-end margins as well? And then on the deposit side, I suppose competition has been maybe a little bit higher than partly reflecting seasonality as well. So when you said that you expect product margin to be similar next quarter, is that more mortgage? Or is it more deposit? If you could just help us understand that a little bit better.

And then on the USCB as well, you commented that margins were quite high this quarter. There's a big improvement. Obviously, there will be some mechanical improvements further from the American Airlines exit. But how much more sort of underlying improvement are we -- can we expect from pricing and from deposit mix, et cetera?

Okay. Thank you, Perlie. I will take both of those. So our product margin impact in Q1 are as we guided and they're in line with our expectations. And I'm going to merge your 2 NII questions, if I may, Perlie, because actually, that product dilution is coming from both mortgages and from deposits. In mortgages, we are seeing the impacts that we called out at the full year, and that's the maturation of the COVID era loans coming through as expected.

Somewhat offsetting that, we're seeing better performance from more recent vintages where we are seeing better retention. So that's a slight positive impact in mortgages and we are seeing the impact of deposit margin compression coming through in there. I expect it to be broadly similar in Q2, Perlie, with all of those factors continuing. And that's simply because of the timing of the maturity of mortgages, but also very importantly, remember, deposit competition in the U.K. tends to be concentrated in Q1 and Q2 because of the ISA season.

Thereafter, we would expect that product margin compression to ease off a little. What's different from when I spoke to you at the full year is we now do expect NII growth in Q2. We expected it to be broadly flat previously. Now we expect growth into Q2 and then to continue growing quarterly thereafter and to grow year-on-year in every single quarter of the year. When I think about what's happening in the mortgage market, we have seen a pull forward of applications, but they have not yet completed.

So March was a very, very large month for applications. And I think that just speaks to the volatility in the rate environment and customers seeking to lock in. To give you an idea, for our June maturity, we've seen roughly double the number of customers lock in by this stage than we would ordinarily do. But that hasn't completed yet. It's going to complete through Q2 and Q3. Margins remain fairly robust. Clearly, rates are moving around, but so are swaps, and they tend to move in alignment with one another.

So that's what's happening in terms of U.K. NII. In terms of USCB, look, the net interest income there is a little higher than we anticipated, but not significantly so, and I wouldn't call out anything in particular. The repricing impacts have worked their way through now, but we will continue to see ongoing beneficial both NIM impact and net risk-adjusted margin impacts from continuing to rebalance the book from just travel and entertainment towards a bit more retail.

So you're obviously going to see a step change over the next quarter, but that will be an ongoing impact. And I'd just call out here also our progress in deposits, really pleased with that. Our retail deposits are now 76% of our overall funding. That's higher than the target that we gave you of 75% by the end of '26, and that has been disproportionately driven by some of the partnerships. So you're going to continue to see mortgage -- sorry, margin accretion. But obviously, it will be more pronounced over the next quarter or so.

The next question goes to Amit Goel of Mediobanca.

So yes, 2 questions for me. One was just back on BUK, but just on the cost piece. So I appreciate there was a slightly different phasing of investment this quarter versus last year. Do you mind just giving a bit more color on like how different was the investment versus last year, just so we can see the kind of the cleaner piece there?

And then secondly, just on the USCB net receivables. I saw after like several quarters of increase, there was a slight reduction. I don't know if that was related to the AA portfolio. But basically, I'm just curious if U.S. players are being a bit more aggressive anticipating reductions in capital demand. And so whether that's a reason why net receivables came down or if actually there is a little bit of a reduction in that market?

Okay. Amit, I will take both of those. So in BUK, I mean, I can see as I look at operating costs, there's a slight miss to consensus. I think that's only timing. And particularly when I look at where that is, it's in BUK. So BUK has got a slightly different profile of investment and actually efficiency delivery this year from previous years. And I'm not going to give you numbers but let me help you think about it.

Probably the structural cost actions will be a little more forward phased than last year, and that's simply because some of the things that we are doing around Tesco as well as the underlying business, whereas the opposite is true of efficiencies. You're going to see them build through the year. So I still believe that BUK costs are going to be down in absolute terms year-on-year.

And clearly, given that they've been up in the first quarter, you should be expecting them to fall in absolute terms towards the second half for the cost-to-income ratio to be in the low 50s. So that's exactly as we expected, and it's just some of the movements around timing and other investments.

On USCB, the change in card levels, I mean, typically, we see a seasonal change in Q1. I don't believe it's any more than that, Amit. And as I look at our performance in terms of purchases and the other factors that we would expect to see as lead indicators, they are no different from the broader peer set but thank you for the question.

The next question goes to Jonathan Pierce of Jefferies.

Sorry, I was going to ask you about share awards, but I nearly fell off my chair when you made a comment on 2028 net interest income. So I'll actually go with that if it's okay. Just to clarify, 2028, you're talking about consensus being very light at the group level, just checking, I heard that properly? And is that comment made in the context of where the yield curve is today or are you saying that consensus was very light even ahead of the move in the yield curve?

And I don't know whether you can give us a bit of color as to where you think we're wrong at a divisional level. Tying into that, just a quick question on the hedge. Are you taking advantage of the fact that the yield curve is markedly higher today? I mean a 1-year forward-starting 7-year is offering you 4.4% today. I'm just wondering if you're pre-hedging maybe a bit more of your future maturities than you might have done in the past.

Okay, Jonathan, I will take both of those. So I made the same comments at the full year, so it doesn't relate to the movement in the yield curve and the guidance that we are giving you is still based on a 3.5% reinvestment rate. We have not changed that number. So -- and it's the group number that I'm referring to as I look at that. So this is no change from what we've said before.

If I can point you to where I think the difference is, I think it arises in 2 areas. The first is U.K. corporate bank. And we see considerable momentum in the U.K. Corporate Bank. We've seen it both consistent quarters now. It has grown its lending in the first quarter by 15%. And it continues to make great progress even before we land the capabilities that we are due to land through this year in iPortal. So that's the first thing I would call out. I just -- I think we don't discuss it a great deal on these calls.

The second thing would be U.S. Consumer Bank, where you've really got 3 things starting to come together here. You've got card balances, which are up 10% year-on-year in the first quarter. We will, in the next few days, complete the purchase of a top-5 unsecured direct-to-consumer loans business in the U.S. and that gives us the opportunity to take that capability directly to our customers and to our corporate clients.

And then the third piece is our deposits, which, as I said, are now at 76%. And a meaningful part of that growth has come from our partnership with AARP. So we are really learning in this business about how we can take the full suite of products to our partner base, and that's what gives us the confidence in that business' ability to grow. Venkat, anything you would add on the USCB in particular?

Yes. So I mean, it's -- you asked about NII, Jonathan, and Anna has given you the various dimensions of it. But in the USCB in addition, what you see is continued improvement in digitization, continued improvement in costs, leading to the higher RoTEs that we've shown this quarter, 18-plus percent.

And what I would say is, broaden the statement that Anna has made, across every part of the business, you are seeing performance in the way we said we would demonstrate it 2.5 years ago and reiterated 3 months ago in terms of top line, in terms of operating efficiency, in terms of jaws, in terms of deposit growth, in terms of lending growth in the corporate bank, in terms of the returns improvement in the U.S. Consumer Bank, returns improvement in the investment bank, et cetera, et cetera, I could go on. And I think that's the picture we would like to emphasize.

Okay. Jonathan, let me come back to your second question, which was on hedge yield. So the simple answer, as you know, we roll the hedge systematically, we roll it mechanistically, and it is not our opportunity to speculate or determine what rates might be. We roll it irrespective of that environment. The thing that we are very focused on, however, is deposit behavior.

So the increase in notional reflects observed deposit behavior over a number of quarters. It doesn't relate to just the quarter past or expectations forward. We actually observe what's going on in the hedge and then we will choose to extend it or indeed contract it. So that's all that's going on there. We're not responding to a change in the yield curve.

The next question goes to Guy Stebbings of BNP Paribas.

To start, if I come back to the hedge, just to follow up on Jonathan's question. It was a meaningful uptick, I guess, in Q1 of GBP 6 billion or so in the notional. Just trying to understand where that's landing because it doesn't look like there's a big move in deposits in the U.K. So is that sort of landing outside of the U.K., the IB perhaps?

And just, I guess, a reflection of the stickiness, I suppose, of those deposits and how you see them going forward rather than as you say, taking advantage of the curve in any way? And also just to clarify, in terms of pre-hedging the hedge, you say you don't do any pre-hedging the hedge when you talk about what's locked in from here? So that would be the first question.

And then the second one was just around ECLs, reasonably flat in aggregate on the performing loan book. I just want to understand the move in the management adjustment, which came down from GBP 369 million to GBP 265 million in the quarter, quite a big move. I think that largely just relates to the GM book, which now filters directly into the models rather than needing an overlay? So I'm not sure if that explains the entire move, but any color there would be helpful.

Yes. Thank you, Guy. I will take both of those. So look, the movement in the hedge upwards over time in notional is going to reflect our, as I say, long-term view of deposits. So it's quite difficult for you to tie quarter-on-quarter movements in deposits to sort of changes in the hedge because what we're trying to identify here is rate and sensitive balances. And obviously, we want to observe that for several, several quarters before we make the change. So you're going to see it outside of the U.K. as well as inside.

And obviously, over time, as the equity and the firm continues to rise, you're going to see us hedging more of the equity position as well. So I wouldn't call anything in particular out. If we do any pre-hedging, it's very limited and it's under very strict risk limits and those have not changed over time and certainly would not explain anything near the portion that I've called out today. So that GBP 6 billion is the observation of deposits.

In terms of your second question about post-model adjustments, I appreciate this is quite difficult to tell because we only give you the full disclosure at half year. But -- just for the rest of you, what Guy is referring to is Slide 40 and is basically calling out the fact that the management adjustments have dropped from Q4 into Q1. And just to remind you, guys, we do these post management adjustments for 2 reasons. The first is where we're doing some work on the models, and to anticipate what that model work will show, we very often take a PMA.

And then the other reason that we take a PMA is when we are faced with a degree of economic uncertainty, and we feel like consensus may not be effective. The point that you're talking about here is the former. So actually, what happened is prior to this quarter, the GM, so the General Motors impairment was not modeled. We were essentially using our expectation and our existing portfolios to anticipate what that was going to be, and we put it in as post-model adjustments.

Now what's happened is we've updated the model and so General Motors is a modeled number. So you're not going to see any change in the total number, it just jumps from being in the PMA to being in the modeled number. The real changes in PMAs that we've done and the ones we've spoken to you about really speak to economic uncertainty and relate to U.S. cards, U.K. cards and the IB.

The next question goes to Andrew Coombs of Citigroup.

If I could just pivot the conversation to capital? Just intrigued on 2 things. One, there's been a lot of press coverage about your comments around the leverage ratio potentially exclude unencumbered gilts. Perhaps you could just touch more broadly on where you see the leverage ratio is a binding constraint now? For which product, which divisions do you believe the leverage ratio is a binding constraint for?

And then secondly, I want to ask about Basel endgame, overall a 5% release expected for the CAT1 and the CAT2 banks and the change in the G-SIB methodology, but arguably more important from a competitive standpoint is the output floor has been dropped. And when I look at the risk weight, I think under ERBA at 75% in retail loans and 45% in credit card transactors. So can you just talk about what you think Basel endgame means for the competitive dynamics for the U.S. Consumer Division and for the investment bank?

Okay. Andy, why don't I start on leverage and then I will hand to Venkat on the second part? So yes, we like the sort of broader consultation might suggest there is an ongoing discussion in the U.K. about the leverage ratio and really leverage being a backstop and we would support that.

You're noting that we have published a piece of work that talks about the opportunity in the U.K. really for the treatment of unencumbered gilts, and we do think that that's important. As we make that statement, it's more about the opportunity for U.K. plc and the reduction in costs that, that would have for the government, and we called out around GBP 2.5 billion per annum on an ongoing basis.

We are not leverage-constrained. Clearly, we have considerable leverage usage within our financing business within the investment bank, that's why we are a significant issuer of AT1 in the market. And as we do so, we're clearly mindful of the relative cost between those AT1s and the kind of margins that we get in the financing business. So the 2 things are somewhat unconnected. One is more of an observation on U.K. plc. Venkat.

Yes. So Andrew, on the capital side. We clearly are watching very closely what's happening in the U.S., not just in terms of capital ratios proposed under the Basel endgame, but the way supervision is itself changing and stress testing is changing. You've got to look at all 3 together, and we would advocate very strongly for the U.K. numbers to be relatively consistent.

And for the U.K. approach is also to adopt greater transparency in the way in which add-ons are determined both for banks and for investors. The particular things on the investment bank and credit cards, let me begin with credit cards. So in the credit card space, you're right that if there are no changes, then the U.K. numbers will, at a parent level for us holding company level, add on more capital per unit risk than a U.S. bank would face.

Now what we are doing to adjust our business is obviously running it more efficiently and also diversifying it and the purchase of Best Egg and the direct-to-consumer loan business should be seen as a part of diversifying our cards business into other places which are less penalized in terms of capital. And then on the Investment Bank, the point I would make is we have already, for some time, been chasing U.S. banks, which have been putting more capital and more balance sheet.

And at least the way we have done the analysis, and you should probably replicate it, is if you look at returns per risk-weighted assets, a form of capital efficiency, I think we've done pretty well. And as you know, we've, over the number of years, made structural improvements in the way the Investment Bank is performing. We've had 8 successive quarters of strength in year-on-year income growth on positive cost jaws, on income over RWA, as I said, and we beat consensus for 8 consecutive quarters in the IB.

This is all deeply structural. And what we are trying to do with these structural changes, with the improved -- increase in financing as a portion of our total revenue, et cetera, is finding our own ways to be competitive and to be efficient. Now on top of that, do I want to row against the current of capital disparity between the U.K. and the U.S.? I wouldn't. But we've made our views known, but we will run our -- we will continue to operate the bank in the way we have and shown the progress we've done quarter-over-quarter.

The next question goes to Jason Napier of UBS.

I think I can echo, Venkat, what you were saying about the sort of underlying performance of the business. If you take out the one-offs, it looks like PBT is up 15% year-on-year. But of course, a lot of the conversations are about one-offs and those sorts of matters. So if I could ask 2, one, quite a lot of coverage in the media around potential SRT governance inquiries. If you could talk potentially about that or confirm that there's no change to the capital outlook for the group as a consequence of what may or may not emerge from that?

And then secondly, just to follow up, please, Venkat, on your last answer around relative capital intensity of the businesses in the U.S. in particular. Could you just give us a sense as to which businesses you think are most impacted by the relative changes that are being envisaged? And in those, just some guess as to the cadence of sort of customer churn. How quickly would we know if there was a delta in competitive intensity that actually mattered on the ground?

Thank you, Jason. I'll start on SRTs and then hand to Venkat. So on SRT, I'm not going to comment on regulatory reviews, but only to say that the regulator in the U.K. regularly conduct reviews both individually and thematically across the industry. We have been very transparent around our Colonnade program, and you can see that in the appendix. We've given you the same slides for several quarters now.

That is primarily focused on credit management, as Venkat talked about before. And indeed, it's been in place since 2016. For those of you following along, it's Slide 47. So it's a well-managed, well-embedded, well regarded with investor program that's been around for a long time. Of course, we have to notify the PRA every single time that we do an SRT transaction. So that's something that we've done.

And from our perspective, the most important thing that we are focused on, and I would expect the regulator to be focused on, are the risks associated with running that kind of process, and we believe they are #1, the financing of SRT, so we do not finance our own SRTs. Secondly, the counterparty credit risk. So remember, ours is cash collateralized. So that counterparty credit risk is minimized. And then thirdly, the risk of the market being shut at any point in time.

Now clearly, you mitigate that by having a very long-running, long-standing, high-quality program like ours, but we also restrict the maturities in any particular quarter, so they are less than GBP 2 billion. So that means that we would be able to mitigate that easily even if the market were close to us. So from our perspective, Jason, we're very comfortable with the program that we have. We believe it's very successful and provides the credit mitigation that we seek to do, and we don't envisage any changes in it. Venkat?

Yes. Just to finish off on one point. So all the attributes that Anna spoke about in the -- of the SRT program, they come from having an evergreen program and an evergreen program where people know that they can expect a cadence of issue from us, the quality of issuance from us and it helps us and it helps them.

On your capital question, let me begin by saying, first of all, there's no new news to us here, right? We've been following this for a number of years. It has been clear that there is going to be a disparity between the U.S. and the U.K. It comes, as I say, not just from capital levels, but from forms of stress testing, the total capital stack, including regulatory add-ons. Now -- so there's not going to be a sudden shift.

What you're seeing is an -- because of the way we anticipate it, the way in which we've constructed our business over time, I just spoke about credit cards in the previous answer, where we've had a high-quality credit card portfolio in terms of FICO scores, and now we are diversifying it with the purchase of Best Egg into direct-to-consumer loans.

Second, on the investment banking side, you've seen again from us an emphasis on financing, which is, as I've always said, a very good business, properly risk-managed and has capital benefits because of secured lending and emphasis, so that's becoming a bigger part of our portfolio. We continue to emphasize intermediation. You will see that we manage our risks very well.

If you look at our VaR, the VaR is managed -- and the number of loss days, which was only 1 this quarter. The VaR is managed at a lower level, VaR obviously is a way in which you control risk and that can have an impact on capital. So the way the business has been structured, it is with a view to these disparities, which are not new, right. And we will continue to work with the capital regime we have and operate subject to it in the most efficient way we can.

Thank you, Venkat. The only other thing I would add, Jason, is just our ongoing focus on the international corporate bank. Clearly, that's another source of relatively capital-light revenue for us in an area where we think we have real opportunities to grow. You talked about that a lot at the year-end. And you can see it again in our dollar deposit growth in the quarter. But thank you for the question.

The next question goes to Chris Cant of Autonomous.

If I could come back to this topic around competition from U.S. players. You've spoken to financing, and that's been an area of growth for you for a number of years now. It's obviously not just RWA-based capital relief that U.S. peers are getting, though they are also seeing a sort of leverage biting point dropping away in the background and how are you expecting to see more competition in that financing space as well? That would be question one, please.

And the second small one, I think. But on corporate lending in the IB, that looked quite soft this quarter relative even with the fair value marks adjusted for you, it looked like a soft quarter. What should we be expecting there going forward, please, noting that you're looking to the ICB as an area of growth? And I know transaction banking is doing well, but if you could comment on that, 1Q print for corporate lending, that would be appreciated.

Okay. Chris, why don't I start? So I'll talk about leverage and then I might hand to Venkat, and then I'll pick up on corporate lending. So look, clearly, financing has been an area of growth for both us and for the U.S. banks, and we've seen that over a number of quarters now. We're pleased with our performance, which is up 31% year-on-year in dollar terms.

And we don't see that the U.S. peers have been leverage constrained up to this point. And indeed, it's not just this quarter. If you look back over successive quarters, as Venkat has said, you see increasing levels of balance sheet generally being deployed into the business. But Venkat, you might want to comment on the competitiveness of this product generally.

Yes. Look, the -- first of all, as Anna said, and we've been seeing this for a number of quarters. We've adjusted our business for a number of quarters. Second, especially when you come to things like financing and prime, there is a competitiveness element to it, but there's also a client service and stickiness element to it. Our rankings have been growing consistently because of the services we provide to our clients in equity financing and in fixed income.

We are a top 2 fixed income financier, have been for a long, long time. So it's these capabilities that we bring to bear that make us very competitive and make us attractive to clients. So I would use it on a much more holistic basis. I mean and as Anna has said and I said earlier, over a number of quarters, you've seen the U.S. banks put in both capital and balance sheet much more than we have.

We've been very disciplined on both. Minor fluctuations quarter-to-quarter but keeping it stable. And yet we've continued to show the results in our investment bank that I spoke about in terms of continuous quarters of improvement. And it's coming from building in the foundations to generate repeatable improved performance. Anna?

Yes. Thank you, Venkat. Chris, the corporate lending line, I appreciate it's very difficult to forecast because what you've got there is an underlying level of corporate lending, that's not really changing. We're clearly cycling through this process of reviewing the book. We're sort of a little more than two-thirds of the way through that now. So that number is fairly consistent at around GBP 50-ish million a quarter. So nothing really happening there. You've obviously got the swing in LevFin marks year-on-year.

It was up more than 100 last year. It's down 40 this year. So you've got nearly 150 basis points of RoTE impact on the investment bank just in that line alone from those LevFin marks. And then the other 2 things that flow through there are cost of hedging and cost of SRT. Nothing really notable to call out there. You should imagine in the current environment, we do a little bit more hedging, but there's nothing particular I would call out for you, Chris.

The next question goes to Nicolas Payen of Kepler Cheuvreux.

Yes. Just one actually. I just wanted to go back to discuss your cost of risk guidance which is now at the top of the 50 to 60 basis points range. Just wanted to know what are your assumption regarding especially the Middle East situation? Does your guidance capture any improvements in the geopolitical situation or status quo or maybe at the other end of the spectrum, maybe a potential increase in inflation because of the situation? Yes, anything you can give us regarding this new guidance.

Okay. Thank you, Nicolas. I mean, we have called out that we expect to be around the top end of our 50 to 60 basis points range. That's purely because of the single name that we took in the first quarter, and we do not see any other signs of credit deterioration in the U.K., in the U.S., in corporate or in consumer. And so from our perspective at the moment, if you do the math, then you'll see that we are broadly in the midpoint of the range for the remaining quarters of this year.

I can see that consensus is already at the position that we've guided to today. So I think that's probably what the market was anticipating. At this point, we don't see any significant impact from the situation in the Middle East, other than the revenue impacts, which have been broadly positive, to date. So the rate impact and obviously, our ability to capture the cyclical opportunity in the IB. In terms of credit, we don't see any deterioration at this point.

However, we have taken 3, I would say, relatively modest adjustment in our IFRS 9 modeling as we look at future potential risks. So the first of those relates to U.K. and U.S. cards, where we have been slightly more conservative with the unemployment rates that we have used predominantly. And we're just recognizing those that clearly consensus is moving on over time. And those 2 particular books are highly, highly sensitive to unemployment and the rate of change in unemployment.

The second thing that we've done is, to Venkat's prepared remarks, we're a little bit more mindful of some of the investment bank exposures. And on that basis, we have put a little bit of downside bias into the investment bank calculation, essentially weighting it more heavily to the downside one scenario. That will be very consistent with what we've done in previous periods where we faced uncertainty. So we're not trying to make a prediction here. We're really just recognizing some of the uncertainty around us.

Now clearly, if the situation were to persist, and we started to see real economic effects coming through in terms of higher inflation, then that may have some impact on credit. But there's a few things I would say, hopefully, to reassure. The first would be, we clearly had recent experience of this in 2022, where we saw a sharp inflationary environment and we saw a sharp increase in rates, and we saw very, very resilient consumer and client behavior.

Corporate balance sheets remain strong. Consumers remain in a very robust position. And whilst we've added lending since then, there's been no meaningful change in our risk stance since that point in time. So that gives us confidence. The second thing is that, obviously, we see, I would say, rational changes in behavior from both clients and consumers. So being mindful of the uncertainty and perhaps paying back their credit cards a little faster than they otherwise might.

We think that that's really positive for credit and it's something that we observe. But overall, nothing additional that we've taken so far other than those 3 PMAs. IFRS 9 is highly cyclical -- sorry, highly procyclical. So if we were to see a real deterioration, then clearly, that might lead us to make some changes. But of course, we'll call that out if it occurs. But thank you for the question.

The next question goes to Chris Hallam of Goldman Sachs.

So my first question is just on lending dynamics. Anna, I think you've just covered some of this, but I want to drill down on 1 point. So in the U.K. Corporate Bank, how much of the moves you've seen on loans and on deposits as well actually in the first quarter is potentially attributable to the macro uncertainty?

So the premise being that if you were to start to see scarcity and sort of inflation-driven restocking cycles, companies loading up on inventory at higher prices that will drive demand for working capital lending, while also compressing corporate cash balances. Simplistically, that just maps onto the Q-on-Q evolution in loans and deposits you saw in the U.K. Corporate Bank, but that could just be coincidence.

And then second question on the disclosure on Slide 46 -- 45, sorry. Has the uncertainty over the last few months in the private credit space changed at all, how you think about the growth outlook in those areas? I think there's a sort of consensus building that the credit risk for the banks themselves is pretty low as you called out the absence of losses.

But simplistically, private credit as an industry has been growing pretty quickly. So if you and your internal planning had forecast that stacked bar chart, let's say, for 2028, 6 to 12 months ago, would the composition of our chart look very different today, i.e., has the size of the opportunity set in financing changed in your view?

Okay. Chris, I'll pick up the first of those and then I'll hand to Venkat. Look, you've seen in Q1, 15% lending growth, 3% deposit growth. I don't think that's due to anything like the sort of behavior changes that you talk about. Chris, I think that's probably a coincidence. And in fact, it's very consistent with what we've seen in recent quarters.

About 50% of the lending growth that we are seeing is coming from new clients. And as they come on board, they are also placing their deposits with us, which is why we're seeing that balance. And remember, we are very deposit-heavy within our corporate bank. Our loan-to-deposit ratio, I think, is around 34%. So we would expect to be growing lending faster than deposits. That is our absolute strategic intent. Venkat, over to you for second question.

Yes. So just on the first point, which is that the growth you see in lending in our corporate bank is very largely our own actions. This is what we said we would do in our strategy. We said that we have had a bigger deposit base and we wanted to encourage lending for our clients and grow our client book. It's exactly what we've been doing.

Coming to your question on structured financing exposures. I think look, there's a supply of credit, there's a demand of credit for credit issue. I think what you're seeing in the liquidity dynamics in the private credit market may mean a shrinkage supply of credit coming from the funds themselves. It will take us some time to see. The reason this thing has happened is that obviously, the private credit funds have been giving loans in a niche, which has been fairly well publicized, the banks were regulated out of.

Now things could change in the U.S. and so banks may come back in there. But generally speaking, when you look at the way we are exposed to it, which is in the way shown on the slide, which is working with the fund managers, I would imagine you're absolutely right that I think the growth of this thing is probably going to be leveling off or declining in the next year or so, but we have to give us some more time, but that will be a reasonable assumption.

The next question goes to Robert Noble of Deutsche Bank.

You sound very, very bullish on the outlook, but the only kind of small PMA taken and the implied rate benefit at the top line and calling out consensus even on lower rates being too low. Is it not a bit perverse that an energy price shock that causes higher interest rates and lower economic growth outlook is actually a positive for bank earnings? So I guess what's the -- is there any negative risk in there from growth? Which parts of the book from a growth perspective would you be most worried about in this type of environment?

Yes. So look, you raised a very good question, Rob. And I think there is a -- there are 2 issues here. There's one of timing, and then there's one of certainty or knowledge. Clearly, inflation risk has increased with what's going on in the Middle East. And you can see it in the U.K. inflation numbers speaking just in the U.K. and over time, there are worries in the U.S. as well.

For a variety of reasons, it's not hit employment. And growth in the U.K. at least until February was strong. So -- and growth in the U.S. remains strong and there are important sectoral reasons for why that is the case, related a lot of course to tech. So -- and we said to you, Anna said that we are not seeing any impact on our retail or corporate credit portfolios in the U.K. or the U.S., especially the smaller companies. So all of that put together explains why credit conditions are generally good. I mean, we said that we expect impairment to be at the higher end of our cyclical range of 50 to 60 basis points.

And we've discussed NII, and we've discussed the interest rate income for the bank. The longer this thing goes on in the Middle East and the more inflation feeds into the economy, then there is a risk of growth or lower growth and then there's a risk potentially of the implications of lower growth, including on credit. But we are not seeing it yet, and I don't think it's fed through to consensus, which is what we follow. That's the reason.

What you're seeing from us is prudent risk management. in the forms of the way we've talked about credit lending, our approach to credit and the way Anna described a slight emphasis to weaker scenarios in calculating IFRS 9 related impairment, so what you're seeing from us is a little more prudent positioning, a little more prudent of waiting of impairment scenarios, but it's not yet played through mainstream consensus numbers or, of course, into what we experienced in the portfolio. Anna?

Yes. Thank you, Venkat. I think the other thing I would call out, Rob, is that our confidence is drawn and relates to the plans that we continue to execute, and that's -- this is another quarter of execution. And of course, we're mindful of the environment, and Venkat's called out a few examples.

But our focus is on executing the plan as it has been over the last few quarters and that's really what's delivering the momentum that you can see today and also the diversification that we have in the book, both geographically and between different types of business allow us to be resilient in quite a range of environments. But we're clearly mindful of the outlook.

The last question goes to Edward Firth of KBW.

I have 2 sort of related questions, and I guess you partly covered it in the answer to Rob's. But I guess it's just -- I guess what we're all struggling with is the contrast between people like the Deputy Governor of the Bank of England saying markets are ignoring risks. There's an awful lot of volatility going on. People are not focusing on it. And the message from you, which is there aren't really any problems.

And so I'm just trying to get a sense -- so the way I'd ask the question is, what has to happen for that to be a problem? You must sensitize your book. Is it that the Middle East continues for much longer than expected? Is it the oil price of $150 is the big question mark because obviously, $100 is not a problem? So where -- what is an environment, which would have you guys thinking this is a problem for our book, and we're going to have to start taking some material numbers? I guess that's the first question.

And then just related to that, I was struck both by the size and the high proportion of write-offs you took on the one-off impairment or the one-off exposure. And I just wondered, could you give us a sense, I mean, is this like a normal exposure to you? Do you have -- would this be like a top 10%? I mean how many of these sorts of size, single name exposure do you have on your book? Would this be a very material one?

And then I guess, secondly, related -- I guess you've been through all of them now. Is it something that -- I mean, can you give us some flavor as to why this was a one-off because it was an extraordinarily big number in itself and a big percentage write-off, if that makes sense?

Okay. Why don't I start Venkat and then I will hand it to you? So Ed, I'll just reiterate, we are very mindful of the environment around us, and that's why we are managing risk and capital very, very carefully. But we go into this kind of environment with a resilience that would not have been there a few years ago. So we are operating with greater proportion of our capital focused on was over returns.

We have higher operating leverage, which gives us greater resilience. And of course, we have much higher levels of absolute capital. So if there is deterioration, then we would face that in a completely different position as a bank. So that's #1. #2 would be, as Venkat said, we continue to manage our risks carefully. He's talked about some changes that we are making around how we approach lending.

I would also call out the way that we've managed the volatility in markets in the first quarter, so you can see both the bar and the single day trading loss that tells you how we are approaching risk in this kind of market. But you're right, to the extent that the situation intensifies, either in terms of inflation, or indeed time, we might see that start to flow through into the real economy. But that's how we are positioning ourselves to manage those things robustly. Venkat?

Yes. So let me just continue on that question for a second, and then I'll come back to the -- to your second question. So what Anna said, we are managing our risks. We take a view to the future, but also look at the structural composition of the business, right? What you've seen in this quarter is anticipation of greater volatility and greater economic weakness.

That has led to volatility in the financial markets themselves, which our trading businesses have been able to do well and because of the help that they're providing to clients and the intermediation as they did. So if you -- the question I always ask is, if on the first day of the quarter, you knew how the quarter would fold out, what results would you expect? And at the last day of the quarter, did you get the results that you thought you would expect, right?

And if you look at our businesses, because of the structural changes which we are doing, a, what you see in each business is what we would have thought; b, the way the businesses interact also gives us protection. So coming back to the question that I think it was Rob who asked it. On the one hand, you're getting an advantage from interest rates. On another hand, you're getting an advantage from trading and trading-related activity.

On yet another hand, you're getting the advantage in the investment bank from people seeking capital markets transactions and IPOs, right? And then credit conditions still remain strong. If that changes, which it could, over time, the longer these things go on, then yes, you would have some issues on impairment, but you may still continue to get benefits from other sides of the portfolio, right?

And then we've not spent some time on this call, but we do have fee businesses, transaction businesses, all of which will be important and relevant as people look to hedge financial exposures. So it's a diversified bank, diversified sources of revenue and it's important to focus on one or the other, but you've got to look at it holistically, and this quarter's results show you the importance of that.

Then coming to the second question. First, I would take you to Page 45, where we've gone through the history of our exposures to these things. And what we've said is, as a credit matter, we've had no losses or negligible losses across all of this. That's the first important thing. When fraud happens, right, and depending on the extent and sophistication of the fraud, the numbers are appreciable. I'll say 2 things. I don't like to lose a single dollar, a single pound to fraud.

On the other hand, this business has been structured, has been performing well over the last number of years. It has been structured in such a way, and we've made fundamental improvements to it that we are able to absorb it. It doesn't mean I like it; it doesn't mean we won't take steps in which we are taking steps to reduce that, likelihood, minimize it and so on, but we can absorb it. In a credit lending business, there's always a chance of that. We look to reduce it and minimize it by good risk management. There are obviously lessons which we have learned from watching these 2 situations and those lessons we've put in. And that's what I would say.

The last thing, I know this is the final question, if I may close on this. The message I'd like to leave all of with is, first of all, thank you for joining us. Thank you for being on this journey with us, thank you for the excellent feedback you give us on this call and between calls, what you're seeing is yet another quarter of the demonstration of the fulfillment of our strategy.

Quarter after quarter after quarter, we've been improving this bank structurally in the ways we said we would and delivering in the ways we said we would across the bank, in the Investment Bank and increase in RoTE now to double digits, it's 15% this quarter. In U.S. cards, an increase in RoTE. When we started this plan, it was 4%. We just printed an 18% quarter. The bank's RoTE itself is at 13.5%. We are reiterating all our targets. Strong capitalization. We're a 14.1% CET1 ratio, which is a little above the high end of the range.

That shows you prudent planning, prudent stewardship of capital and with a view to what might come in the future, which some of the guys you have asked questions about, the growth in NII, the strength of our deposit base, the increase in U.K. corporate lending fulfillment of our RWA's promises in the U.K., increased client engagement in the investment bank and so on and so on and so on. So we've laid out our strategic plan. We've laid out the structural improvements; we look to deliver upon it quarter after quarter and to report to you that way quarter after quarter. That's our aim. Thank you very much for joining us.

Thank you, everybody. We look forward to seeing you on the road. And of course, we'll see some of you at the analyst breakfast. But thank you for your questions.

Thank you. That concludes today's conference call.

Thanks, everyone, for coming to this session with Barclays. Thanks, Venkat, for joining us one more year. Venkat, CEO of Barclays, as you all know. As usual, before kicking off the session, we will ask the polling question.

What would drive relative outperformance of Barclays shares in 2026? Number one, U.K. business is growing loans over 5% CAGR. Number two, its markets business successfully navigating current volatility; number three, cost income on course to reach the low 50s in 2028, cost of risk remaining between 50 and 60 basis points. And number five, capital distribution seem to beat the over GBP 15 billion target '26, 2028.

[Voting]

Capital distribution over GBP 15 billion. I must admit I thought #4, which had obviously embedded private credit in there [indiscernible]. We'll touch on the different themes in any case.

You presented your new 3-year plan last month. You're aiming to -- for over 14% RoTE with quite conservative actually market assumptions and a lot of it is under your control on costs and efficient capital allocation. Since then, of course, there's a lot of volatility in the market. Geopolitics, AI has come up. How are you thinking about the environment now and how you're seeing the business navigating it?

Yes. So first of all, thank you very much, Alvaro, for having me. I really enjoy being here at your conference and great credit to you for the crowd you always managed to get the engagement you managed to. That's it. So thank you for having us be part of it.

First of all, I think the context of our plan which we presented 1.5 months ago is important. We presented a plan 2.5 years ago, approximately a little over 2 years ago in February '24, which we saw as the first stage of stabilizing and growing the bank, where we laid out targets of increasing RoTE greater than 12% in '26, increasing capital distributions at that point to greater than GBP 10 billion, again, '24, '25, '26, and rebalancing the bank, including an investment in our U.K. businesses.

We've delivered every quarter under different circumstances, different environments. We delivered every quarter the elements of our plan. And so quite clearly, our shareholders wanted to hear about the future. And of course, we wanted to talk about the future. And so the elements of the future now are continuing that journey, intensifying the journey with greater ambition, accelerating ambition is the words I use. And that is increasing RoTE from greater than 12% in '26 to greater than 14% in '28, increasing the capital return from greater than GBP 10 billion for the 3 years ending '26 to greater than GBP 15 billion for the 3 years ending '28, and I take full note of the polling results.

And then the third thing is to continue the rebalancing of the group, which is investing. We said GBP 30 billion of RWAs in the U.K.-related businesses by '26. We reported greater than GBP 20 billion or about GBP 20 billion, so well on the way there. And to bring the Investment Bank to about 50% of the group's RWAs.

Now -- and alongside this are 3 things. One is accelerating the ambition. Second is investment in core technology, in the ability to do AI for deeply personalized customer service and for deeply personalized product offerings and to do that in an aggressive way. And we've doubled our investment to $2-plus billion, over $1-plus billion over the last couple of years. And then continue the journey on higher ROTE, both from a greater proportionate exposure to our higher returning businesses in the U.K. and from improving the returns in our existing businesses.

And you would have seen that the Investment Bank has continued to perform well. It's in double digits, up a couple of percent from the previous year. Our U.S. cards business, which when we started our plan was 4-odd percent RoTE is, I think, 14% now, 11% now. So it's all increased. So that's what we continue to do.

In the current environment, and I'm sure we'll talk about credit in a minute, the current environment, obviously, there's volatility. I've said many, many times that if you've got a good trading business and a markets business, which we believe we do, volatility is an opportunity to gain revenues by serving your clients as long as you manage your risks well, your trading risks well, which we take great effort to do. We still think that the M&A environment so far has been strong. Let us see if uncertainty continues, how that might be.

And then the consumer exposures start off at a very, very good point at the credit exposures. So initial conditions are important, and they're good. So that's where we feel now. But obviously, you've got to watch the elements of uncertainty in the market. I'm sure we're going to come to them.

Yes. One theme that has definitely come up, as you well know, is private credit. The concerns have resurfaced on the back of MSF -- MFS in the U.K., sorry. My question really is, is MFS a result of Tricolor credit review? How should we think about that sort of case in the context of wider concerns around private credit and MBFI exposure more broadly. There are now a good handful of names in the MBFI space that have defaulted. So there's -- understand the concerns there.

Yes. So I'll come to them. They are all slightly different. First of all, let me just say before I begin that I don't think -- I would not categorize Tricolor and MFS as private credit. It's a different form of lending, securitized lending.

To understand the context for us, and I'll talk about it, first, let's understand our framework. what's our framework. Our framework is in the market environment, which is shifting, first, we've got to monetize our opportunities. And I spoke about the trading environment. And just to remind you, the Investment Bank is about half the bank. 2/3 of the Investment Bank is our markets business. The markets business is about 1/3 of the bank, right? And it's an important source of revenue. And short-term volatility is conducive to the markets business as long as it allows you to serve clients, allows you to intermediate. We take great pride in the financing elements of our markets complex. And all that works as long as you manage risk well, which comes to the second point, manage risk well and trading risk as well as credit risk.

And then the third thing is planning on realistic assumptions, which you spoke about, the conservative assumptions that underlie our plans, both on the size of the wallet in markets in trading and in investment banking, which we've held flat as well as our assumption into the plan that -- on the returns from the structural hedge, which structural hedge drives about 50% of our income growth through 2028. And the interest rate assumptions behind that are relatively conservative.

So now we'll come to Tricolor, MFS and private credit. So the first thing is, as I said, I do not think Tricolor and MFS are the same as private credit. Private credit, and I'll come to that in a second, is lending, our definition, lending from the nonbank financial sector to individual corporates. And it's lending outside of securitized markets and banks, right? So high-yield bonds, regular investment-grade bonds aren't private credit. Lending by banks is not private credit. It's by nonbank players. So we'll come to that in a second.

MFS and Tricolor, obviously, I'm disappointed by the fact that we had anything to do with either of those companies. I take risk management very, very, very seriously, and I don't like to find ourselves in these situations. With -- they are both examples of fairly deep and sophisticated fraud. We don't know how long it's persisted. We'll find that out fully. It's manifested itself in more recent years. In the case of tricolor, we have spoken to you about our exposures. And at that time, I said to you that I think there are 2 important things when you look at these situations. One is what are the financial pressures on the underlying business? And second is what is the quality of financial controls.

I said that in our October earnings and said that we are going to look at cases where we have to worry about one or the other or both. And as you can imagine, we've been doing that. The other thing I will say is risk management is an evergreen exercise. It's like mowing your lawn. You do it over and over and over again. And that is what we are doing, and that is what we have been doing. We have no material credit concerns to report in private credit, which I'll come back to.

On MFS, the publicly number has been GBP 500 million exposure. What I want to tell you is that our anticipated impairment from it is a materially lower amount. Why is it materially lower? It's materially lower because there are multiple facilities in them. Obviously, we risk managed by facility, although we care about the ultimate arrangement of those facilities. And not all of those -- and some of those facilities are better behaved and better performing than others. That's what our expectation is.

It's also a number that is not the kind that would have been material enough for us to report on an intra-quarter basis. So you will get the results in due course. And it is also a number which is in the context of our business in this quarter and other quarters, something that we can bear. Having said all of that, right, on the one hand, I do not expect -- I fully expect that we will meet all our targets for this quarter and this year. On the other hand, as I said, I'm disappointed that we had anything to do with either of these 2. And the risk management exercise has always been strong, will continue to be strong, and that's where we will persist.

On private credit, I've given you the definition. And what I'd say, repeat is that we have no material credit concerns. So what do we do in private credit? You would have heard that after the financial crisis, changes in capital regulations, lending to smaller and lower-rated companies started leaving the banking system and going to nonbank players. So we -- our direct exposure to these kinds of loans tend to be, therefore, what banks normally do or what banks do post crisis, which is higher quality loans and to larger companies. Obviously, we have an SME business and so on, but it's -- that's a different issue.

In private credit, what we do is we lend to managers. And we work with the large, well-proven, long-running managers, top-tier managers. We lend against their portfolios of loans. We take great importance in our rights of collateral. So collateral calls when market values shift. Our transparency into marks and our ability to mark the portfolio because our ability to call collateral depends on our ability to mark the portfolio, prudent LTVs. So we lend with typically 60% or lower LTVs against these facilities. Sector limits, borrowing concentrations and the weighted average EBITDA of the companies we lend to underneath it is greater than $200 million. So they are larger companies, not smaller companies.

So we tend -- we don't rely on third-party valuations. So as I said, collateral valuation, credit management, sector exposure, name exposure, overall facility LTV, client selection, the manager you work with, these are the pillars of risk management in our lending to private credit. So we feel very comfortable with it. And as I said, risk management is evergreen. We'll keep looking and looking and looking, but we have no material credit concerns to report there.

Okay. Very clear. We've touched on this already in the Investment Bank, you're factoring sort of low single-digit revenue growth and within that flat market share in markets, you have grown share in the past. Is now the flat share reflecting your more cautious view on markets more broadly?

Sorry, is it affecting?

No, the -- within your plan, you're assuming flat market share. In the past, you have grown that market share. So is that a reflection of your view on markets more broadly?

So there are a couple of countervailing factors in this. One is, you're absolutely right, we have grown market share, and we aspire to grow market share, right? So let me leave you with no doubt as to our ambitions.

Our ambitions are to be a bigger, better, stronger markets house. The way we've stated that ambition is, obviously, there are financial aspects of the ambition. But we've said that of our top 100 clients, which are the largest clients in the world, we are #6 investment bank and #6 markets business. So with a large number of them, we want to be #5, rank above. That number was in the 40s 2 years ago. It was 62 at the end of last year. Our target is 70 this year, right? So the more you do with each of these clients, the more you do in each of the products that you serve them. That has helped us.

And in fact, the rank is a consequence of both work, the growth in our equities platform and business over the last number of years, especially in prime and financing. The growth -- we've always been very strong in fixed income, as people know in credit, especially. And we've continued to grow that with our trading businesses and securitized products, we are creeping up the ranks. Some would say jumping up the ranks. So all that is good. And we continue to be intensifying that effort and investing in the technology that enables that effort.

At the same time, we've got to be mindful that you are in an economic environment that may favor certain sectors we are not in. We are not in commodities. We are in emerging markets run out of London and New York, not in local emerging markets. And we are going to live through a period of changing capital rules in the U.S., which we'll be hearing imminently, which could change the playing field for a U.K.-domiciled investment bank versus the U.S. one.

When we factor all that together, we feel that it's the right and prudent thing to say that we'll hold our own. Do I hope we do better than that? Yes. Am I trying to do better than that? Yes. Am I pushing the organization to do better than that? Yes. But for our purposes, the assumptions are what we give you.

In the U.K. on the other hand, you're forecasting 5% loan growth CAGR across the U.K. businesses. It's a strong outlook. We've seen evidence of that coming through last year already. So it's more momentum, sort of ongoing momentum. What do you think is driving that? Is it sort of catch-up CapEx after a decade post-Brexit, AI CapEx? Any particular sector you're seeing driving that growth?

The first thing quite simply is bringing it under greater management focus and making it a part of a management objective. That's what we did [ 2 and half ] years ago when we said that we are going to grow our RWAs. Second is catch-up, as you say. There were parts of our corporate bank, parts of personal lending where we were underrepresented. Now we accelerated some of that with the purchase of Tesco and the capabilities it gave us in both unsecured lending in credit cards as well as in personal loans.

We also had laid the groundwork a few years before that with the purchase of a specialty mortgager called Kensington Mortgages, which gave us the ability to do complex and high LTV loans. So the GBP 20 billion growth in RWA has come from all of these things, the GBP 20 billion we've seen so far, and that gives us the confidence to go further. And then in 2 areas of our own control, business banking in the U.K. and corporate banking in the U.K. First, we made the U.K. Corporate Bank a separate segment reporting into me. We've invested a lot in the underlying technology, something we call iPortal, which makes it easier for corporate managers to work with us.

The importance of this to the overall strategy of the bank cannot be underemphasized. About 90% of U.K. investment banking clients are corporate banking clients. That number is much smaller when you leave the U.K. So we're trying to build the capability, not just domestically but globally to give good user-friendly service to our clients. And that investment is also what is driving this growth. So we think we're going to grow just by offering better products, offering better customer service, focusing on this and regaining share that we had frankly ceded over a number of years previously.

The cost outlook in your plan was better than most of us expected. You're aiming for low 50s cost income and in BUK. Specifically, you expect costs to be down each year. Can you walk us through what you're doing differently there? Which areas are you seeing the biggest reduction?

Yes. So obviously, cost-income ratio is cost and income. Let me talk about income first, and then I'll come back to cost. So 2026 will be the fifth consecutive year of NII growth for the bank. It's not just what interest rates themselves do. It is how you do your structural hedge and how you manage interest rate risk. We have said -- I've said many times that I believe that it should be predictable and programmatic. And that's what we do and why we gave you clarity into that.

I believe interest rate positioning is one of the most important things the bank does, and it is not something that -- it's something that you need to be very, very rigid and risk managed and programmatic about. That drives about 50% of the growth of group income growth. We've spoken about the markets and other businesses. Elements of the environment can be favorable, but we've been conservative in the way we've projected it.

So then if you come to cost -- but actually, before I come to cost, just further on income, we are looking to invest in diversifying our income more from interest income into fee income. What we are doing in wealth management is important as a part of that. The acquisition we made in the U.S., Best Egg, which originates to distribute direct-to-consumer loans is an important part of that. Our investment in transaction banking in the corporate bank is an important part of that.

When you come to cost, there are some things which are mechanical and then some things which we are, of course, striving. First of all, the cost element comes down. Costs we've had in the last few years from the acquisition of Tesco and the integration of Tesco fall off. So that's one thing that helps. Second is that if you look at our own performance, we've been delivering positive jaws, including in the Investment Bank. And we are doing this by investment in technology, which we expect to accelerate, and we spoke about this a lot at our Investor Day by a broader and deeper modernization of both our infrastructure and our practices, harmonizing practices, operating consistently across the bank, which in large complex organizations always takes effort.

And then the use of AI. I mean people talk a lot about it. And I think it's important for me to say that it is absolutely tangible, absolutely real, something which we are investing a lot of time and effort in. How and where we will see the productivity, I think it's a little early to say. We are seeing tangible ways in which it is improving the quality of customer service, the quality of product personalization, but we think we are at the tip of the iceberg. But the cost-income ratio is basically driven by the income profile and our expectations of cost to fall for all these reasons. So again, we think it's realistic.

I think you queued me out very well to talk about AI, which is even a bigger theme this year than it was last year. And obviously, it's driven some of the market moves earlier in the year. And one number that caught my attention to the plan is you quote 75% of your workforce in central services. Other banks may or may not be the one that was presented before you was quoting that in the long run, they see 25% of the workforce in central services. How are you thinking about the AI benefits over a longer time period? And also, maybe you can touch on the benefits and also some of the disruptive risks that the market is concerned about.

Yes. So as I said, it's an important part of this bank, and I imagine any bank's efforts over the next number of years. The central services number, let me just talk to that for a second before I go to the rest of the question. Our 75% number includes not just technology and operations, but just because of the way we are constructed, all of the risk, finance, legal, HR, compliance, businesses, audit. So all that is sitting in this number. So obviously, a range of types of jobs, right? Everything from a serious quant programmer and developer who's going to be helping us use AI and advance its use within the bank to more operational and process-driven people.

The investment in AI takes 3 parts. The first is, as you probably heard, you get the best out of AI if you are on a modernized infrastructure and where your data is stored properly, stored safely and accessible and usable for the sophisticated models. So we said at our earnings that 70-plus percent of our applications are on the cloud. That number is increasing, that we're spending a lot of money on standardizing data platforms and computational platforms, how you access this. Then on top of that comes the AI itself, which is a combination of enabling people across the bank, training them and then placing a few big bets on projects.

This we are doing in a series of efforts, we call it a catalyst program within the bank, focusing on what we think are the big important projects where we need to use AI to make ourselves more efficient. And that's being run by our co-CEOs of the -- COOs of the bank. And the phrase I've used internally is that the business is now revolving around technology. Technology is not revolving around the business. So we are already seeing the benefits of this, greater than 15% developer productivity, automating core accounting platforms within finance and using AI and credit risk systems. We're going to see more of it.

Not all of it will lead to savings in people, but it could lead to tremendous improvement in product delivery, which is why how you use it is important. So I'll give you an example. I've spent some time with people who manage our customer service agents. Typically, somebody calls, there's a phone call, deal with a customer service agent, they service you. At the end, a manager, maybe once every few weeks or a month, sample, listen to a few phone calls to see how the people are doing. Did they answer the call properly? Did they help the customer with the problems? Did they help them quickly and efficiently? Did they ask how else they could help?

Now with AI, what we are doing is sampling the transcripts of 100% of the calls. So that you get a full view of how a customer service agent is helping somebody doesn't necessarily save time, but it actually creates for a better understanding about the quality of your service, a better ability to help individual customer service reps improve the way in which they deal with customers. And hopefully then you offer better customer service because you use it, right? That should be an edge for us ultimately in growth and revenue and market share. It will take time, but that is the intelligent use of AI. So we are going to be seeing it across our businesses, whether it's trading bots, whether it is better settlements, whether it's better customer service, better ways of developing algorithms.

And I think over time, we will get a sense of how much this is going to give us revenue growth because we can address customer needs better, faster? How much of it is going to drive capability because we are building more personalized products? And how much of it is pure efficiency savings?

Maybe a last one on capital, and then I'll open up to the floor for questions. Your plan is based on 14% CET1 and the reality of your range, as you've explained before, is 13% to 14% we have sort of, in theory, Pillar 2A potential reductions once Basel 3.1 is implemented and the FPCs also push banks to run with lower buffers in the U.K. When do you think you'll be in a position to reassess the capital target? It looks like your peers are closer to 13%.

Well, look, first of all, you're right, we are at the high end of our capital range. I think it's important to project a strong capital and to have a strong capital base for the bank. It's taken us some years to get there, but we've been there in the last couple of years, and I think it's a helpful place to be. Second is, there are still uncertainties in the world.

First of all, the U.S. is coming with its Basel regulations. Second, the U.K. is coming out at the start of next year. We have to see what that is. Third, we have to understand on top of all of that, what it is as a management team, we feel that it's prudent for us to maintain in light of both whatever regulation lands up with and what we see in the overall environment. So expect us to continue to run a strong, well-capitalized bank.

And we think, by the way, that at this level, we can run the place efficiently. We can provide capital to our businesses to operate in an efficient way and a high-returning way. And as we've said before, generating generous returns to our shareholders.

Great. I'm going to open it up to questions, although -- yes and today have been a quiet audience, but let's see if there's any questions. I got a few more. There's one, [ Carlos ].

Coming back to the...

Sorry, can you just identify yourself...

[ Carlos Garcia ] from Mutuactivos in Madrid. I wanted to ask about the private credit exposures. I mean I still don't catch what are the economics in terms of capital consumption and profitability of lending to someone that is lending to someone else. I assume you take the same risk for a lower spread? Or is there any benefit in terms of capital consumption? Or is there any equity ledger in these funds that is protecting you?

So if you will forgive me, we will recommend to you a piece of Barclays research from the middle of last year that takes you through how nonbank lending works. But in sum, what you are doing is that you have a lower capital risk because you're lending to a diversified pool of assets and that somebody else is owning the senior risk on. I mean you're owning the senior risk, somebody is owning the junior risk. So you do it to a diversified pool of assets at a 60% LTV and you get the benefits of diversification and you get the benefits of lower risk and you get the benefits of daily collateral calls and margining. So you -- the return per unit risk is more beneficial to do it that way than the traditional way under the capital regime.

The traditional way is the leverage buyout traditional...

The traditional way where a bank would just lend o its own balance sheet.

Yes. There's a question there.

Maybe to follow up, as some players are under stress, would you be happy to take the slack in this private credit lending? Would you increase your exposure?

Unlikely. I mean I think in this environment, risk management is important. And the thing that is moving in the market because of the liquidity concerns is what is the underlying valuation, right? And so you need clarity on valuation before you make that answer, right? So we are happy with our levels of exposure.

Aditya from Brevan Howard. Just one more on that. Do you think what's going on in private credit is at risk of being systemic? And how do you -- and what do you think could be the secondary fallouts on that front?

Look, private credit is still a relatively small part of the overall credit market. So I don't know what the word systemic means, but it can mean many things, but it is still a contained part of the market. And it's dominated by, as we discussed, nonbank financial players. So into the banking system, as long as the exposures remain well controlled and the LTVs are well managed, it feels less likely to come into the banking system. And in fact, that piece of research, I'm sorry, again, talks about that.

The concerns more broadly are obviously what people -- if there are certain sectors that are affected more than others and what happens to lending in those sectors. But that's as much being driven today by the quality of credit as the business model disruption that we are seeing or that we are hypothesizing based on what we think AI will do to businesses. So that's the part that's harder to call out.

By the way, there's a panel tomorrow in private credit, what's next with our credit strategist and U.S. credit strategist with myself and our...

You're running that panel, I saw.

Yes. I'm hosting -- not my knowledge. I'll share my knowledge as well, but we've also...

Tomorrow evening, right?

Tomorrow, closing.

You're closing the session with that.

On a high note.

On a high note.

Any further questions from the audience? There's one there, [ Aransha ].

She does not need to introduce herself.

I'm village, let's call it like that. So just more broadly, I mean you've been quite visionary or first mover in things like SRT and mobilizing the balance sheet, recycling capital. When you look at where most of your takers of SRTs, your counterparties in SRTs are coming from. Do you feel there's too much concentration in general? Do you think the number of counterparties are too narrow? Or actually, there's still enough capacity to grow and mobilize balance sheet at the same pace?

Is that a general question or a question for Barclays?

Sorry, in general, but you've done one of the best -- in general, you've done one of the best deals where you've been very smart recycling assets. So as you grow, how do you see the capacity to continue?

Yes. Thank you. So let me just -- for everybody's sake, talk a little about our SRT program. So this is a risk transfer program, which we use to transfer risk on a name-by-name basis from our loan book. We've done this for over 10 years. What we do is that we essentially sell our exposure or proportions of our exposure on a name, loan-by-loan basis. So this loan we've originated, part of that is sold to very large asset managers around the world. To be very clear, we do it on what we call a fully funded basis. So we receive the money. It's not a derivative.

And second is we do not finance it, okay? So there's no coming back to us. We've operated under those principles for over 10 years. And I joined the bank as Chief Risk Officer over 10 years ago. When I came, this program was in existence, and I thought my, what a good idea because it achieves 2 things. First of all, it actually gets risk off the balance sheet. Second is that it gives you capital benefits because it gets risk off the balance sheet.

The importance of such programs, which we had discovered -- the world had discovered during the financial crisis is you can't just start a program like this when you think the credit markets are bad because people don't know what kinds of loans you originate. People are not familiar with your default history and so on. You'll create it and you'll sell it, but many of your asset managers, you know that a real track record is more important than a synthetic track record. And so we've got a real track record over 10 years. To date, about 40-ish percent, give or take, of our loan exposures are securitized in this manner. That number has crept up, and it's crept up because when spreads rally, you should do more of this, which is what we've been doing. Why? Because it's cheaper to lay off the protection. And in a bull market, people want to buy your stuff, okay?

So I have no doubt, [ Aransha ], that the demand side, if credit conditions worsen, the demand side will soften. What I hope is that it softens less for us than it does for others because the critical part of the risk management is to keep doing it. Keep doing it even when it's painful and you want the NII, you just do it. You get the risk management benefit, you get the capital benefit. And the importance to us of working with the very large players is they're sophisticated buyers, good relationship, and they would have the capacity in good times and bad to stand with you.

Now you're right, it's a narrower group. But I think it's -- I think the strength comes from the length of the program, the performance of the program and people knowing about the program. So you should expect us to continue to see -- to press on with it, right?

Next question, please. Maybe I'll touch on where we started with the polling question in the reply around distribution. Your plan outlines GBP 15 billion total distribution.

Marina tells me to say greater than GBP 15 billion.

Greater than GBP 15 billion, she tells me as well that. Runs a tight ship.

I'm back to eighth grade maths all over again.

That you've explained it builds in some flexibility around if M&A opportunity arises. Can you share with us what kind of asset you would potentially consider? What kind of hurdle rates you have? And presumably, if that doesn't happen, then it will be greater than GBP 15 billion?

Yes. So you're right, that GBP 15 billion -- greater than GBP 15 billion has in it above that number, some capacity to invest in the business and to return capital to shareholders. Investments in the business can be organic and it can be inorganic. Our base plan is organic. There's a lot for us to do in technology. There's a lot for us to do in growing our businesses.

And by the way, what's happening with AI and its effect on business models, and you can see it even in the financial services industry, makes you want to pause and think exactly when you buy a business, what kind of business you're buying, right? And how vulnerable is it to technological disruption. That's why the business we bought in Best Egg, we felt comfortable in it because it's a technology business, right? The thing is completely digital, as in fact, is our entire U.S. consumer bank. We don't have a single branch in the United States, right? It's an entirely digital offering of lending, of banking, credit cards. And of course, there are customer service people who use their fancy AI stuff I told you about, but it's a digital operation. So you've got to look at that when you buy a business.

For us, the answer has always been if something gives us capability and/or scale available at a good price and which we can integrate. To that, I will add now, given what AI is doing, the strength of the business model over time and its ability to deliver that. So if something meets all those criteria and works for us in the way Best Egg has worked for us right now, Tesco and Kensington have worked for us, then we will always look at it.

But I cannot emphasize enough the importance of the business model, right? Tesco, 3 years ago, Kensington, 5 years ago are people-heavy business models. We have modernized them, and we will modernize them. But that kind of a people-heavy business model today, you've got to look at very carefully. That's why Best Egg was so appealing to us.

Anyone has any last questions? Maybe I'll ask a last one to wrap up. Yesterday came up with Lloyds and NatWest around potential sort of policy change in the U.K. Obviously, labor government has been pretty supportive. But if there's potentially changes in leadership in the U.K., how do you think that potentially can affect the policy momentum?

Yes. Look, I read the remarks that my counterparts or the other 2 U.K. banks made yesterday. And I agree with them entirely. I mean I think it will be a bad outcome for this country to increase taxation in the banking system, which is a critical part of the economy, over 10% of the economy, when the banking system is already more heavily taxed than counterparts in the Europe and the U.S. We are a key part of London, being one of the great financial centers of the world.

And the vitality of this industry is tremendous, whether you take the large banks or you take the fintechs. And so I think it's important to continue to support that industry. And we will work with the government as we have, and we are very grateful for this government recognizing the importance of this industry and continuing to act in a very pragmatic way with regards to this industry. We think that's a good thing.

Great. We're approaching the end of the session. So once again, thank you, Venkat. Very interesting session for being with us for one more year.

Thank you.

Welcome to Barclays Full Year 2025 Fixed Income Conference Call. I will now hand over to Anna Cross, Group Finance Director; and Dan Fairclough, Group Treasurer.

Good afternoon, and welcome to the Full Year 2025 Fixed Income Investor Call. I'm joined by Dan Fairclough, our Group Treasurer.

Let me begin with a brief overview of our financial performance in 2025 and key areas of the progress and targets update announced this morning. Barclays achieved all financial targets and guidance in 2025. We generated a return on tangible equity of 11.3%. Top line income grew by 9% year-on-year to GBP 29.1 billion, and we achieved our NII guidance for the group and for Barclays U.K. Our cost/income ratio once again improved year-on-year to 61%. And the group loan loss rate of 52 basis points was comfortably within the 50 to 60 basis points through the cycle guidance. Finally, we remained well capitalized, ending the year at the top of our 13% to 14% target range after accounting for today's buyback. This positions us well to deliver against our '26 targets and provides us solid foundation for future progress.

Taking a step back, since 2021, Barclays has been on a journey to sustainably higher returns. So far, this has been through stabilizing the bank's financial profile and exercising capital discipline, keeping RWAs stable in the Investment Bank and building on its strongest areas whilst prioritizing growth in our highest return in U.K. businesses. Alongside this, we have simplified our processes to drive efficiency and exited nonstrategic businesses. Year-by-year, we are improving the profit signature of the group. And by delivering stronger financial results, we create capacity to invest to secure sustainably higher returns, which extend beyond 2028. We believe that our plan continues to be constructive for fixed income investors, and Slide 5 provides the highlights.

Looking forward, we are confident in delivering group RoTE greater than 12% in '26, building to more than 14% in '28. Stable income streams in the retail and corporate businesses will materially drive income over the next 3 years. This is supported by the structural hedge, which will drive circa 50% of total income growth. We expect modest cost growth supported by planned efficiency savings and normalization of the elevated cost base in '25. This combination will deliver positive jaws in every year of the plan, as we have done in the last 3, yielding a low 50s group cost/income ratio in '28. Meanwhile, the group has operated around the through-the-cycle loan loss range of 50 to 60 basis points for the past decade, and this range remains appropriate going forward.

Our strong risk management position is supported by our risk transfer capabilities, where we executed our first U.K. consumer loan securitization in Q4. We will continue to grow in our home market. So far, we have deployed GBP 20 billion of the GBP 30 billion planned business growth RWAs over the 3 years to '26. We expect this momentum to continue, enabling more than 5% loan growth annually to '28. And we will continue to maintain broadly stable Investment Bank RWAs at around GBP 200 billion. As a result, we expect Investment Bank RWAs as a percentage of the group to fall to circa 50% by 2028. This is later than the initial target of 2026 as it reflects the postponement of previously anticipated regulatory changes.

And finally, a word on our capital priorities. Stronger returns will drive capital generation of more than 230 basis points in 2028, an improvement of more than 30% over the next 3 years, and we continue to exercise disciplined capital allocation. First, by holding a prudent level of regulatory capital, which remains our top priority. As you have seen, we have been operating around the top of the 13% to 14% target range ahead of the expected regulatory developments, which Dan will cover shortly. Second, by distributing capital to shareholders. Third, we will maintain capacity for selective investments to support structurally higher returns beyond 2028. Given the strength of capital generation, this capacity does exceed the level of investments set out in the plan today.

I'll now hand over to Dan for detail on the full year performance.

Thanks, Anna. Let me begin first with capital on Slide 8. We ended the year with a CET1 ratio of 14.3%, generating 173 basis points of capital from profits. Given this strong capital position, we've announced a GBP 1 billion share buyback and an GBP 800 million final dividend equivalent to 5.6p per share. Adjusted for the buyback announcement, the CET1 ratio is 14%.

Looking ahead, we continue to expect between GBP 19 billion and GBP 26 billion of regulatory RWA inflation. Within this, the circa GBP 16 billion effect of IRB migration in the U.S. Consumer Bank remains our best estimate. Around GBP 5 billion of this will now happen with the implementation of Basel 3.1 on the 1st of January 2027, with the remainder anticipated later that year.

In addition, we continue to expect a Basel 3.1 day 1 impact of GBP 3 billion to GBP 10 billion of RWAs. We expect to provide further guidance later in the year as we work through the final rules. We are likely to use the option available to implement some elements of FRTB later, on the 1st of January 2028, which may defer a small amount of this impact.

We expect a reduction in the group Pillar 2A requirement following each of these changes. We have been operating around the top of our 13% to 14% CET1 range with the returns and distributions in the plan announced today based on this level. Post implementation, we will consider where we operate across the range.

On the broader regulatory landscape, in the U.K., we welcome the constructive tone in the recent FPC review around bank capital requirements and the considerations of other major jurisdictions. However, it's important to emphasize that the FPC's reduced system-wide benchmark for Tier 1 capital does not affect the industry's current capital requirements or operating levels in itself. Instead, the review represents the start of a process of engagement.

We will continue to work closely with the Bank of England with a view to promoting international alignment and the competitiveness of our business and of the U.K. financial services sector.

Moving up the capital stack, on Slide 10, we show our Tier 1 and total capital requirements as a proportion of RWAs. We continue to target a prudent buffer against each of these requirements, which helps us manage any RWA and FX movements as well as our issuance and redemption profiles. Our Tier 1 ratio is 17.9%, maintaining a healthy headroom above our 14.6% regulatory requirement. Within this ratio, we had an AT1 component of 3.6%. Looking ahead, we expect to maintain robust ratios across all tiers and have a light capital redemption profile this year, including no AT1 calls.

Turning now to Slide 11. We issued GBP 16 billion of MREL in 2025, with an MREL ratio of 35.8%. In 2026, we expect to issue GBP 10 billion, with a skew towards Senior, reflecting more limited requirements for AT1 and Tier 2. This target is lower than last year given prefunding in 2025 and the maturity profile throughout 2026. We have continued to see currency diversification where it makes sense. We've also extended our weighted average life at historically tight spreads. This included a non-call 10 euro AT1 and a non-call 20 dollar Senior, with both seeing strong investor demand. This can be helpful in reducing sensitivity to credit spreads and our go-forward annual issuance requirements.

Onto the next slide on liquidity. Our average LCR of 170% represents GBP 131 billion in excess of our regulatory requirements. Our average net stable funding ratio was 135% and the loan-to-deposit ratio was 73%, both demonstrating a continued robust liquidity position.

On Slide 13, you can see that our deposit base increased by GBP 25 billion across customer segments. We saw strong corporate growth, driven by the development of our U.S. dollar offering in the International Corporate Bank and an improved market share in the U.K. Corporate Bank. Retail deposits also grew, both across our U.K. businesses, as well as in the U.S. Consumer Bank, reflecting the ambition to build core deposits as a percentage of total funding. Our deposit base continues to demonstrate a high level of diversification between customer segments, geographies and currencies. A significant proportion also benefits from long-standing operational relationships and deposit insurance, reflecting its stability as a source of funding.

Stable deposits across the group led to the full reinvestment of maturing structural hedges throughout 2025 compared to our prior planning assumption of 90%. We also reinvested these hedges at interest rates of circa 3.8%, higher than the 3.5% assumption. As a result, gross structural hedge income increased GBP 1.2 billion to GBP 5.9 billion, contributing 46% of 2025 group NII, excluding the Investment Bank and head office.

Looking forward, we've already locked in GBP 6.4 billion of gross structural hedge income in 2026 and GBP 17 billion over the next 3 years. This income will build materially and predictably as we fully reinvest maturing hedges at higher yields. The increase in the average hedge duration to 3.5 years reduced the quantum of maturing hedges to circa GBP 35 billion per year from around GBP 50 billion in recent years. This slows the pace of structural hedge income growth, but therefore, prolongs the expected positive effect until at least 2029.

Turning to Slide 15. Another area of focus in recent months has been digital assets, which are gaining significant traction within traditional financial services and present an exciting opportunity for Barclays.

Venkat talked this morning about our ambition to leverage digital technology to better serve our clients. We are playing a leading role in the U.K. industry innovation and are well placed to bridge developments in the technology space between the U.S. and the U.K. We are developing the tokenization of our own deposits, which will lead to quicker and more straightforward transactions for our clients. Over time, we expect this to enable the tokenization of other assets, in particular, across our capital markets businesses.

In this space, we are participating in the Sterling Tokenized Deposits or GBTD pilot phase. This is focused on connecting traditional and tokenized deposits in the U.K., and overlaying new functionality such as programmability. GBTD will allow us to test both retail use cases, such as remortgages, and wholesale use cases such as corporate bond issuance and investment.

We are also exploring our role in the stablecoin value chain and use cases for clients. Here, Barclays is working with other leading G-SIBs to investigate potential benefits and implications of jointly issuing a 1:1 reserve-backed form of digital money.

We are actively engaged with authorities in core jurisdictions to foster innovation while ensuring key risks are mitigated. Digital assets present the opportunities to significantly transform key activities within the financial services industry for our clients and we are excited to drive this transformation.

Finally, a quick word on credit ratings. Our target remains for Barclays PLC Senior to qualify a single A composite across all indices. This would require an upgrade from either Moody's or S&P. We believe the outcomes of our strategic plan and the targets announced this morning support this objective in terms of increased profitability, greater capital generation and a continued rebalancing of the group. We will continue to engage with all credit rating agencies on this topic.

With that, I'll hand back to Anna.

Thank you, Dan. To summarize, these targets represent a realistic ambition of what we expect to achieve in the next 3 years and is underpinned by our robust capital and liquidity positions.

We will now open the call for questions. Operator, please go ahead.

[Operator Instructions] Our first question comes from Lee Street from Citigroup.

I have 3 questions, please. Firstly, obviously, Barclays has been linked in the press with various inorganic growth opportunities that are being acquired also by the banks. And you've just highlighted the selective investments to support high returns and you're operating at the higher end of your CET1. So I guess the question is, what is your appetite for inorganic growth? It kind of sounds like you're hinting that something is quite likely to happen. So that would be my first question, please.

Secondly, you highlighted the large contribution of the structural hedge. So my question is how easily can you add to structural hedge balances given the higher reinvestment rates and the fact you're going that long along the curve?

And my third question is what's the constraint on the amount of SRTs that you'd actually be willing to write? Is it your own risk appetite? Is it the regulator? Is it leverage? And we get some idea of the benefits of CET1, but is there a way of better understanding the benefit to asset quality and how that shapes and impacts be it Stage 2 or Stage 3 loans, just to understand the real sort of benefit there? That would be my 3 questions.

Thanks very much, Lee. Thanks for joining us. I'll take the first of those 2 questions, then I'm going to hand to Dan. So in terms of inorganic, we've done sort of 3 recent transactions, and they all have a number of things in common. And I'm really talking here about Kensington, about Tesco and Best Egg. So the first is that we want them to be clearly sitting within the strategy, furthering that strategy. So with Kensington, it gave us a risk capability we didn't have. With Tesco, it gave us some significant bulk, if you like, in unsecured, which is one of the areas where we really wanted to expand as part of this plan. And then thirdly, in Best Egg, really it's helping us tilt the USCB towards more capital-light revenue, but also broadening out the product set that we can give -- that we can sort of supply to our partners, if you like, making it more of a consumer bank than has been a cards business, which has been in the past. So they're either going to fit within our strategy and deliver volume or capability.

The second really important thing for us is price. And we're clearly looking at absolute ROCE or absolute ROIC depending on what kind of investment we're looking at. We're also thinking about whether or not this can drive the EPS of the firm. That's very important to us. But also, we are looking at the relative return versus a buyback. That's extremely important to us because of the strict capital hierarchy that we have that you might remember as first, regulatory; second, shareholders; third, investment in the business.

And the third one that's really essential here as well is that we don't want to embed ourselves with a very, very complicated integration that might distract the business from executing the plan. So that's a critical part.

So as we look at things, we're looking at those 3 lenses. If we've done things, it's because they've -- we've been able to tick each one of those boxes. If we haven't, then it's because one of those boxes remains unticked.

In terms of your point around operating towards the top end of the capital range, that's really because of the Pillar 2 comments that I made sort of earlier in the year. With IRB not yet implemented, we are carrying higher levels of Pillar 2 than we otherwise would. We're also expecting some changes in Pillar 2 that might come off the back of Basel. We do expect that to be the case. But we don't know what they are yet. And what we don't want to do is set either our capital levels or indeed our distributions on top of a regulatory quantum and timing that is not clear to us.

We don't want to be sort of moved around by those things if they were to change. So we do think that the capital -- that the right capital level for Barclays in the longer run is between 13% and 14%. But until we have that regulatory clarity and the MDA drops again, then you should expect to see us towards the top end. So that's why we're operating at that end rather than any expectation that you should link that to an inorganic move. Sort of beyond that, what we did say today, though, was given the capital generation of the group, we are holding back some investment capability here. Now if we're unable to use that sensibly with all of the criteria that I set out before, then we will return that to shareholders. We're not going to sit on excess levels of capital.

Yes. Thanks, Lee. So on structural hedge, we're really pleased that we're now rolling 100% of those balances. So we're already doing quite a lot to protect the hedgeable balances. Obviously, a lot of those balances, deposits come from really core markets for us, and we put a lot of effort into protecting that through the client proposition through technology. The MRD book, obviously, is a component of the hedgeable balance. Every time we make a pricing decision there, we're really balancing commercial outcomes versus protecting the balance. So quite a lot goes into that, although most of the hedgeable balances are from mature markets, I'd probably call out the International Corporate Bank. That's clearly an area where we have ambition to grow, and we've been quite successful in growing balances. We tend to start with those client propositions with nonoperating balances. But look, over time, we've definitely got ambition to transition that to operating balances. And obviously, they would be hedgeable. So it's a real focus for us.

You asked questions about SRT as well. Look, we really do think about SRT as a risk management tool. So the hedge ratios that we want to run across the portfolio is a key factor that goes into how much we do. As we've said before, our biggest program here is Colonnade, which you should view as sort of being broadly at scale. It's very mature.

The thing that we focus on there, in particular, is the RWA amortization per quarter. So this is the amount the protection decreases per quarter. And obviously, to the extent we want to refinance those clients, then that could create an RWA drag for us. So that's why we think it's sort of broadly at scale. Elsewhere, it's probably much more of a targeted risk management tool. So in the U.K. business, for example, we've done a number of mortgage transactions, and we did a consumer loan transaction as well. But it's more about areas where we're growing, where we think the risk is higher, and we want to manage that.

And then I'd probably put Best Egg in a slightly separate category. Obviously, that's more of the business model point where we've got an originate to distribute model. But in the grand scheme of things, activity there will be relatively modest. Hope that's helpful.

Yes. And just a quick one. In terms of understanding the impact or benefit to Stage 2 or Stage 3 or is that just not a lens you look through '26 purely RWA?

Yes. We don't disclose that, but it is a real benefit for us. On the corporate loan book, lower down our watch list grades, there will be good coverage of SRTs as well. So we clearly do benefit from that as we migrate. And sometimes, we will look at that very directly in terms of the more surgical transaction. So in mortgages, we've done a transaction that is specifically targeted Stage 2, Stage 3, for example. But we don't disclose the benefit, but it's clearly a factor here in the SRT trades.

Sorry. The only other thing I would add is it's not just sort of in the day-to-day, but we also get benefit and stress from the Colonnade program. So that is also important to us. Thank you, Lee.

Our next question comes from Paul Fenner-Leitao from Societe Generale.

Congratulations on the results. I've got -- well, Lee stole my third question. So I've got just a little bit of an add-on, but the other 2 are still live. First on supply. Thank you for clarifying that you intend to do less overall. You do make the comment that you're very well positioned in AT1 and Tier 2. Would it be wrong to think that given spreads are tight and you've got Tier 2 call coming up that you're still quite likely to do a Tier 2. Is that fair, notwithstanding the comments on, I think, it's Slide 10. So some clarity around that? Or is there no intention to do capital, that would also be quite helpful. That's question number one.

Question number two, in terms of ratings, thank you for the slide discussing your ambition to be single A at senior level. I guess my question -- I mean that's very helpful, and it suggests that you care about ratings. But given spreads are so tight, what real benefits does it bring you or why am I being too myopic about thinking that it might just bring you a couple of basis points in Senior or is that enough to make you want to get upgraded?

And together with that is what's your sense around how close you might be? It's been 3 years since you were upgraded, I think, by S&P or Moody's. Who do you think is the closest. I mean, officially, the outlooks are stable. It would be great to get a sense of timing.

And then just an add-on to these SRTs, I think did you say that you don't disclose how much sort of benefit you've got from the SRTs you've done to date? So in terms of basis points of RWAs, can you give us that number? And what you think -- and if you can, then what you think the maximum benefit, capital benefit from SRTs is fair to expect of a group the size of Barclays? Is it 150 basis points? Is it 75 basis points? Yes, that would -- it would be great to get a sense.

Okay. I'll start with those, and I'm sure we'll add in. Yes, look, in terms of the issuance, so we got GBP 2.4 billion of Tier 2, GBP 900 million of that is a call, GBP 1.5 billion is a bullet. That bullet will have largely amortized down in terms of capital treatment. So it will be just over GBP 1 billion in terms of Tier 2 that's coming off. So we should expect us to do something but not lots. You wouldn't expect it to rule out issuing AT1, but hopefully, you've got the steer there that we're going to be limited or small in our activity given the no call in 2026.

Next question, I think, was on ratings, right? Look, I think -- I'm an optimist, so I'd love to think that if we got a ratings upgrade, our credit spreads would continue to tighten and would compress with others. We view that it's overdue, and we view that the credit profile has materially improved, and it would be good to get the ratings to go along with that. But obviously, the market will determine where our spreads trade.

We're in very active dialog with the rating agencies, as you would expect, including talking to them about the targets to 2028. If you read the reports and you read the things that they're focused on, including profitability, sustainability and the rebalance, we think everything that we're doing is absolutely on the right track. But clearly, the rating agencies will make their own decisions. I think it's 2 years since we got upgrade rather than 3, just to nitpick. We'd agree with you, it would be good to get an upgrade.

In terms of SRT, we don't disclose the RWA amount, but we have put out this GBP 54 billion of total notional. You could probably drill through and get a reasonably good estimate of the RWA benefit. As I said, Colonnade program is kind of at scale. You shouldn't expect it to grow, but you should expect us to do things sort of ad hoc in the U.K., but we're not looking to kind of take that up to a big, big size and Best Egg will be reasonably small. So not -- you shouldn't expect major, major changes in the SRT volume that we're going to do in the near term.

The next question comes from Daniel David from Autonomous.

Congrats on the results. I've got a couple of questions. First one, kind of relates to leverage and the second one on capital. I think in the call this morning, you talked about how you deploy leverage balance sheet you could into some parts of your business, one being IB financing. I guess one way of improving or increasing that ability is by issuing more AT1. So I guess my question is, do you have like a ceiling on the amount of AT1 you want outstanding that you could use to deploy in lucrative businesses around the group? And then linked to that, I guess, the FSR that came out before Christmas was a bit disappointing in terms of the regulatory easing that we saw. But there was mentioned that potentially a review of the leverage framework. So do you think it's warranted that the leverage framework is revisited? And do you think there might be some relaxation there?

And then the final one was kind of picking up on some of your comments earlier. I think that operating at the higher end of the CET1 range is a very powerful message at the moment. I guess what makes us nervous is that you could become more aggressive like some of your peers. So I just wanted to understand, are there certain things that could happen, which would make you become more aggressive? So I guess you mentioned the [ 2A ] reduction and a few other bits. But is it right to assume that it will be at 14% out to '28? Or are there certain things that could happen that can see you maybe push to the lower end of that boundary in the interim?

Okay. Thank you, Daniel. I'll let Dan take the leverage part of that and then I'll follow up with your capital question.

Yes. Thanks, Dan. Look, from our perspective, we think that the AT1 quantum is at about the right level. So you shouldn't expect us to change that materially. Obviously, there is a cap on AT1 in the leverage ratio. And obviously, we focus on that through stress. So it's broadly in the right spot.

In terms of the FPC, I mean, you're absolutely right, leverage is one of the things that they have focused on, and they're interested in that as a dialog topic. We would agree with the comments that they have made that leverage across the U.K. banking sector has moved more towards being a frontstop measure, and that's as a result of the reduced levels of risk in the U.K. banks. And although for us, CET1 is still constraining, we would support that as well. So we'll have to see where we go. But I think it's encouraging that they've made that a focus of the review. You want to take the third one, Anna?

Yes. Thank you. Thanks, Dan. So just reflecting on the 14%, look, we are comfortable operating at that level, as you say, perhaps reflective of the environment, but for us, very much this sort of anticipation of reg change it's not impinging on our ability to either deliver returns or indeed distribution.

So given the momentum we have in the business, we're really waiting for 2027. So what will happen on the implementation of Basel 3.1 at the beginning of 2027? And then we do expect the IRB implementation during 2027. So that's the cards advanced model. So we'd expect a further Pillar 2 update at that point in time. And it's only really when we have those that we will be able to make a decision out where we want to run within the range.

I wouldn't conflate that with any sort of movement to a change in discipline at that point in time. We are very, very clear that we are capital generative, but at the same time, that capital hierarchy remains in place, we hold it very, very carefully. So firstly, reg; number two, shareholders; number three, investment in the business.

And we do feel like we put considerable investment into the business in this plan. We're doubling the organic, if you like, run rate of investment. And we do think that there's only a certain amount of change that the organization can take on at any one point in time. So we're going to remain disciplined. All we're calling out here is that we're waiting for reg change. It's nothing more than that.

The next question comes from Robert Smalley from MacKay Shields.

Really follow-up on 1 or 2. When -- I think, Anna, you talked earlier -- in the earlier call about RWA rationalization. Equity derivatives are RWA-intensive. TB can be. Now we're in the cycle -- M&A cycle that's in full swing that will need more financing.

So when we look at your IB balance sheet, what's the best use of balance sheet as a competitive advantage here? And what's the optimal mix for your balance sheet in this environment. Can you give us an idea of where you see that breakdown and where it stands today? And if you could quantify a little bit of that, that would be great.

And then secondly, just -- and this is an ongoing topic, just exposure with respect to private credit sponsor business and exposure to BDCs.

Okay. Thanks very much, Rob. I will take that. So just on the first one, I think it might be useful just to have a look at Slide 64 of the presentation we did this morning because what that does is it gives you the split, and this is the only level at which we do give a split of IB RWAs.

And what you'll see is that over the last 3 years, we've reduced the level of IB RWAs deployed into banking. And the reason that we've done that is what we set out at the very beginning of the plan, which was we felt like the loan book had a very heavy level of capital within it, within banking, that wasn't necessarily generating the kind of returns that we thought they should.

So what -- over the last 2 years, what you've seen is us get through about 2/3 of that loan book, and we're making tough decisions with those clients around whether or not we extend those loans again, fundamentally looking for better returns from those clients. And that's what's leading to that reduction in RWAs in banking. And you can see that much of that has been deployed into the markets business, which certainly over the last couple of years, has had the opportunity to deploy it very, very effectively.

But here, we've obviously got another year's worth of that loan book review. So I'm expecting more efficiency to come from there. And that's really important for their story because fundamentally, we will then have the opportunity to deploy that -- those RWAs that come free, if you like, into the IB as a whole.

Now what the optimal mix is, changes our time. And that's really how we think about the IB. We think about it as a single business. So what you're going to see over time in different quarters or different years is we will be deploying more into some businesses depending on what we think the market opportunity is. And certainly, given this trajectory so far, it's not holding us back in DCM, which is probably the most capital-intensive part of investment banking. In that particular part of the business, we have been growing share over the last year. We've just been much, much more disciplined with capital, and that's really what's happening. So we don't feel like it's holding us back.

In terms of the second part of your question, which was really sort of about private credit sponsors, let me say from the outset, sponsors are an important part of our business. We do feel like the debt part of our sponsors business is pretty mature. I'm just remembering back to our original presentation, and I'm sure Jordan and the guys can find that for you, where we showed that our share of sponsors in DCM was actually very similar to that of our U.S. peers. What was different was we weren't getting as much M&A and ECM business from them, which is inherently capital-light.

So if I were to look at our sponsor strategy, it's leaning more into those sort of capital-light fee areas of ECM and M&A, and we have made some progress there.

In terms of your private credit question, I'd encourage you to look at Slide 100. Sorry, there are so many slides, but I think it's nearly the last one in the pack. And that sets out our private credit exposure. It is what's committed, so it includes drawn and undrawn. And we really set out on that slide how we feel about it, the fact that we are really focused on the top managers that we really are focused on ensuring that we have valuation rights. We are focused on businesses that are generally relatively larger in this market, and we're very focused on LTV. So we manage that with real discipline.

Obviously, we have risk concentration limits. So across any particular part of the industry or any particular counterparty, you would expect us to deploy those with real discipline. So we've got no immediate concerns. And really, the private credit story is as much as it has been over the last sort of 3 to 6 months. Hopefully, that's helpful. We'll get you that other slide.

Thank you for all of the detail on that. I'm now looking at Slide 100. So I appreciate that. And I appreciate all the work that's gone into these decks.

Okay. Thank you, Rob. I think we've got one more question in the queue. Perhaps we can go to that, please?

Our final question today comes from Gildas Surry from Credit Agricole.

Can you hear me?

Yes, we can.

I just wanted to follow up on [ Richard's ] question about private credit. Back in 2024 around April, there was a partnership maybe announcement made with private credit or alternative credit platform, AGL Credit Management. Just wanted to know if you have partnerships in place where you would share maybe some economics on the pipeline or on the financing. So if you look back 2 years from this announcement, whether you see those partnerships as successes now and achieving what they -- what you expected them to achieve? That's my first question.

Second question as well is a follow-up on SRTs. It's difficult to triangulate between the notional amount that you hedged through Colonnade and the Pillar 3 disclosure in the SEC 1 table. So we have to make assumptions. And would it be fair maybe to assume a range of RWA density, about 60% to 70% maybe for your risk transfer activity?

Second question and my last question is on liquidity. Your liquidity coverage ratio back in December, the threshold for the FSCS guarantee has been increased to GBP 120,000. I would expect the change of category between the stable deposits and the less stable deposits to the denominator of the LCR ratio, the weighting for the outflow rates from 5% to 50%. And so can you just guide us whether this increase of the deposit limits has actually led to a change of categories for the retail deposits between stable and less stable deposits?

Okay. Thank you for that. You were a little bit faint at times, but I think we got your 3 questions. The first was on our private credit joint venture. So I'll answer that, and then I'm going to pass to Dan in terms of the last 2.

So you're right, back in '24, we announced joint venture. I mean it's successful, but I would say not particularly material in the context of our business. So nothing that we would separately call out or give metrics on. I just again guide you back to Page 100, which tells you more broadly how we feel about private credit. It's no different to any other credit decision that we make. So we're very focused on choosing the right counterparties, getting the right visibility and then managing the credit when it's on our balance sheet. So that's probably the message I would leave you with on that one. Dan, SRT?

Yes. Look, the Pillar 3 disclosures on securitization will include a broad range of securitization, so not just SRT. We can probably have Investor Relations team follow up with you. But I think probably a more accurate way to kind of approach this question is to kind of look at the RWA density in the books, and we can help you kind of walk through those RWA densities. And that's probably an easier way of getting at it rather than the 3 because there'll be other things in there as well.

In terms of the point on the guarantees, this was a relatively minor change for us. It's about GBP 1 billion of liquidity value. So it was not a material moving impact in the LCR. Obviously, as we said in the prepared remarks, the LCR is very strong. So yes, no material impact and comfortable with the liquidity.

Okay. I think that brings us to the end of our fixed income conference call today. I can see no more questions in the queue. So I'd just like to thank you all for your continued interest in Barclays and for joining us this afternoon. And no doubt, we will see many of you on the road over the coming few weeks. So thank you so much. Have a great rest of the day.

Thank you.

Thank you for joining, everyone. That concludes today's conference call. You may now disconnect your lines.

Good morning. Thank you for joining us today. So thank you.

We have today the Barclays Full year 2025 results, our progress and our target update. Today, we will outline targets for the next 3 years to deliver an even better run more strongly performing and a higher returning Barclays. This builds on the improvements which we have delivered in the last 2 years of our plan and which we shared with you in February of 2024.

But first, let us take stock of the progress so far, starting with our 2025 results. There will be an opportunity for those in the room to ask questions at the very end of our presentation.

So turning now to Slide 4. Barclays achieved all financial targets and guidance in 2025. We generated a return on tangible equity of 11.3%. Our top line grew by 9% year-on-year to GBP 29.1 billion, and we achieved our NII guidance for the group and for Barclays U.K. Our cost/income ratio once again improved year-on-year to 61%. And the group loan loss rate of 52 basis points was comfortably within the 50 basis points to 60 basis points through the cycle guidance.

We have also announced today GBP 3.7 billion of shareholder distributions for 2025. This is up from GBP 3 billion in 2024. This includes dividends of GBP 1.2 billion and share buybacks of GBP 2.5 billion, and that includes a GBP 1 billion tranche, which we announced today. And importantly, we remain well capitalized, ending the year at the top end of our 13% to 14% CET1 range after accounting for today's buyback.

We are delivering these improvements as we said we would. In 2025, we simplified the bank further, achieving GBP 700 million of gross efficiency savings versus the GBP 500 million target, which we had had for the year. We divested the remaining nonstrategic businesses, and we announced a long-term partnership for payment acceptance.

Operational improvements across the group are creating a better Barclays, driving stronger financial performance. All our divisions generated double-digit RoTE in 2025, and this was an improvement on the prior year. In the Investment Bank, greater capital productivity and cost efficiency contributed to a 2.1 percentage point increase in RoTE to 10.6%. And the U.S. Consumer Bank RoTE increased 1.9 percentage points to 11%. This reflects additional scale and operational progress to improve the business mix to improve pricing and improve efficiency.

Finally, we are continuing to rebalance the group towards the 3 highest returning U.K. businesses. We have now delivered GBP 20 billion of the GBP 30 billion RWA growth, which we targeted for the end of 2026, and this includes GBP 7 billion in 2025. So we see good momentum with 6 consecutive quarters of organic loan growth in Barclays U.K. and 5 such quarters in the U.K. Corporate Bank.

Progress in each of these 3 areas is delivering structurally higher and more consistent group returns. It has also increased my confidence in and my expectations for the group. Stronger and more consistent returns mean that we are better equipped to serve our clients and that we have more capacity to invest in the business. All of this is providing a solid foundation to create more value for our shareholders in the next phase of our plan through to 2028 and beyond. We will return to this later.

Our progress in the last 2 years reflects the consistently excellent work of our colleagues, over 90,000 of them. They implement our strategy every day and are core to our success. So I'm therefore pleased to announce today a grant of approximately GBP 500 of shares to the vast majority of our colleagues, essentially all full-time employees outside of managing directors.

This is the second year of such a reward, and it is more than just a reward for past effort. We are aligning the actions of our colleagues with the ultimate outcome of their efforts, which is the change in our share price. And I believe this equity ownership is really important for all our colleagues.

With that, over to you, Anna.

Thank you, Venkat, and good morning, everyone.

Slide 6 summarizes the financial highlights for the fourth quarter and full year. Before going into the detail, I would remind you that a weaker U.S. dollar reduced our reported income, costs and impairments. Return on tangible equity increased from 10.5% to 11.3% year-on-year, in line with guidance. Pre-provision profit increased by 13% as income growth, coupled with efficiency actions supported 3% positive jaws. Profit before tax increased 13% to GBP 9.1 billion and earnings per share by 22% to 43.8p.

My focus, as ever, is on operational progress, which strengthened throughout the year. Income increased by 9% year-on-year to GBP 29.1 billion. We grew stable income streams by 9%, supported by 8% growth in retail and corporate businesses and 17% growth in financing within markets. The strength and predictability of this growth means we are upgrading our expected group income to circa GBP 31 billion in '26 versus circa GBP 30 billion previously.

Elsewhere in the Investment Bank, intermediation revenues increased by 13% as we helped clients navigate a volatile environment whilst our IB fees were stable. Group net interest income increased for the fourth consecutive year and by 13% year-on-year to GBP 12.8 billion, reflecting 3 factors: First, stable deposits across the group supported further significant growth of structural hedge income, which I will discuss shortly. Second, lending grew across all divisions, and we exited the year with strong momentum. And third, operational progress in the U.S. Consumer Bank drove stronger NII and NIM.

Turning to the structural hedge. As a reminder, the hedge is designed to reduce income volatility and manage interest rate risk. We had assumed that we reinvest 90% of maturing hedges, but we fully reinvested assets throughout '25. We also reinvested hedges at higher rates than planned. As a result, hedge income increased GBP 1.2 billion to GBP 5.9 billion, contributing 46% of group NII, excluding IB and head office. The increase that I -- in the average hedge duration that I called out last quarter from 3 to 3.5 years further supports the predictability of hedge income, which I will return to later.

Now moving on to costs. We delivered GBP 700 million of gross efficiency savings in '25 and GBP 1.7 billion cumulatively towards the GBP 2 billion target by '26. These savings have contributed to 10% positive jaws since '23. The group cost-to-income ratio decreased again to 61%, in line with guidance despite several cost headwinds in the year. Total costs increased by GBP 1 billion to GBP 17.7 billion, with nearly half of this coming from the addition of Tesco Bank. And we chose to accelerate some discretionary investments, ending the year with structural cost actions around the top of the GBP 200 million to GBP 300 million guided range.

The '25 group cost base also included some items that we do not expect to repeat. First, the GBP 235 million of finance provision in Q3 without which we would have ended the year at 60%. and second, circa GBP 50 million of one-off costs in Q4, including a VAT expense in Barclays U.K. Turning now to impairment. The full year impairment charge of GBP 2.3 billion equated to a loan loss rate of 52 basis points, in line with the through-the-cycle guidance of 50 to 60 basis points.

The credit picture remains benign with low and stable consumer delinquencies and wholesale loan loss rates below the through-the-cycle range. The Q4 loan loss rate of 48 basis points fell versus Q3, reflecting lower single name charges in the Investment Bank.

Calibration of our impairment models to better capture consumer behavior resulted in lower loan losses in Barclays U.K. throughout '25, including in Q4. With these now largely complete, you should expect the Barclays U.K. loan loss rate to be closer to 30 basis points from Q1. The U.S. Consumer Bank loan loss rate was higher in the quarter as expected, shown on the next slide. 30- and 90-day delinquencies were seasonally higher versus Q3 and broadly stable year-on-year, and U.S. consumer behavior remains resilient as we show on Slide 95 in the appendix.

The Q4 impairment charge increased GBP 52 million quarter-on-quarter, reflecting higher balances. As a reminder, the Q1 loan loss rate tends to remain elevated following holiday-related spend in Q4.

Turning now to U.K. lending. We have now deployed GBP 20 billion of business growth RWAs in the U.K., including GBP 13 billion of organic growth, and we exited '25 with strong momentum. Mortgage balances have grown for 6 quarters, and we delivered GBP 3.1 billion of net lending in Q4. Mortgage applications in '25 were higher than in any prior year, supported by Kensington and increased broker engagement following improvements to the platform in Q3. We also acquired 1.4 million new credit card customers in the year, up from 1.1 million in '24. As we show in our operational data pack on Slide 79, this included 300,000 new Tesco Bank customers.

Supported by this, credit card balances grew to the highest level since 2017. Core business banking lending has grown for 4 consecutive quarters, and we expect overall balances to grow in half 2 as headwinds from the runoff portfolio diminish. U.K. Corporate Bank lending grew 18% year-on-year and market share increased 100 basis points in this period to 9.6%. In each case, we have further to go, supporting our plan to deploy GBP 30 billion of RWAs by '26 and onwards from there.

Turning to Barclays U.K. in more detail. You can see financial highlights on Slide 15, but I will talk to Slide 16. RoTE was 23.8% in the quarter and 20.7% for the year. NII of GBP 2 billion increased 11% year-on-year and 3% quarter-on-quarter. On a full year basis, NII of GBP 7.7 billion was in line with guidance, and we expect an increase to between GBP 8.1 billion and GBP 8.3 billion in '26.

The hedge is expected to drive around GBP 550 million of additional NII. As I'll cover in more detail later, this is a smaller allocation of the total hedge income growth versus '25 with more growth now allocated elsewhere in the group. We expect a circa GBP 100 million product margin impact in our mortgage book, driven by maturities of higher-margin loans written during the stamp duty holiday in early '21. This will be weighted to half 1.

We also expect lending growth to continue throughout the year. As a planning matter, we expect this benefit to be offset by continued, but easing deposit margin compression. These effects will lower NII quarter-on-quarter in Q1 with stability and growth from Q2 and Q3. And on a year-on-year basis, we expect growth in each quarter of '26.

Non-NII of GBP 247 million was broadly stable year-on-year with a full year just above GBP 1 billion. We expect a similar level in '26 with some seasonal variation. The one-off items I described earlier accounted for around half of the year-on-year increase in operating costs in Q4. These should not repeat in Q1 '26.

Moving on to the Barclays U.K. balance sheet. Deposit balances increased GBP 3.1 billion versus Q3 and were broadly stable versus last year. Customers continue to seek higher-yielding products and time deposits, which both grew quarter-on-quarter. Lending grew for the sixth consecutive quarter and by 4% year-on-year, driven by mortgages and cards.

Moving on to the U.K. Corporate Bank. RoTE was 19.1% in the quarter and 18.9% for the year. Q4 income grew by 18%, while costs grew by 8% as we accelerated discretionary investments. These investments support delivery of a high 40s cost/income ratio in '26 following a 4% improvement in '25 to 51%. Q4 NII growth of 22% reflected stronger volumes across both sides of the balance sheet. Lending grew 18% year-on-year, reflecting improvements in the lending process. Deposits grew by 7%, resulting in a 34% loan-to-deposit ratio, up 3 percentage points.

Turning now to Private Bank and Wealth Management. RoTE was 26.3% for the year, on track for the greater than 25% target for '26. Q4 RoTE was impacted by higher costs from an acceleration of investments and a historic litigation charge. This was small in the context of the group, but reduced this division's Q4 RoTE meaningfully to 12.6%. Client assets and liabilities grew 9% year-on-year and assets under management grew 11%. More than half of this AUM growth came from net new assets under management of GBP 3.3 billion, including GBP 0.6 billion in Q4. This contributed to 4% quarter-on-quarter income growth, and we expect continued volume and income growth in '26.

Turning now to the Investment Bank. As a reminder, our objective here is to generate higher structural returns by improving the productivity, mix and efficiency of the business. Risk-weighted assets have been stable for 4 years. Income to average RWAs has increased by 110 basis points since '23 to 6.6%. In the top right, more stable income from financing and the International Corporate Bank grew 14% and accounted for 42% of IB income, up from 32% in '22.

Moving to the bottom left, Markets income has grown year-on-year for 7 consecutive quarters as we deepen client relationships and investment banking income has grown for 5 of the past 7 quarters. Together with 7 consecutive quarters of positive operating jaws, this has improved the financial performance of the division.

The Investment Bank delivered a full year RoTE of 10.6% in '25, up 210 basis points. Q4 RoTE was seasonally low at 4%, up modestly year-on-year. Income grew 7%, which we show in more detail on Slide 25, and costs were flat. In U.S. dollars, markets income was up 17% year-on-year, delivering around 2/3 of the Investment Bank's income in the quarter. FICC and equities grew 14% and 21%, respectively. We saw particular strength in securitized products within FICC and prime and equity derivatives in equities.

Financing income grew 20% year-on-year and for the sixth consecutive quarter, with prime balances up 30% year-on-year, including strong growth in Asia. In Investment Banking, income was broadly stable. The U.S. government shutdown weighed on ECM activity with the majority of Q4 IPOs pushed into half 1 '26. This was offset by a 7% increase in DCM fees and an 18% increase in advisory fees. The M&A pipeline is strong, and our share of announced fees and volumes due to complete in '26, has increased year-on-year. International Corporate Bank income was broadly stable, including 5% growth in transaction banking income.

Turning now to the U.S. Consumer Bank. Operational progress has continued. Net receivables grew 5% quarter-on-quarter and 10% year-on-year, around half of which related to the addition of the General Motors balances at the end of Q3. Our partnership cards business has grown faster than the overall market in 16 of the last 20 quarters. NIM improved slightly versus Q3 to 11.6%, supported by the repricing that we undertook in '24 and portfolio mix. Retail deposits grew 5% quarter-on-quarter and 20% year-on-year, which improved the funding mix. And we continue to drive greater digital interactions, supporting a 41% cost/income ratio in the quarter.

We expect this progress to continue, reflecting sustainable improvements in returns. Q4 RoTE of 15.8%, was supported by a one-off benefit, which I'll come to shortly, adjusting for which RoTE was 12.5%. And the full year RoTE increased 190 basis points to 11%. In U.S. dollars, Q4 income grew by 28% year-on-year, whilst costs were up 4%. NII increased 19%, reflecting stronger volumes and margins.

Following a review of customer behavior, we have updated our assumptions to reflect more transacting versus revolving balances and longer duration customer relationships. This has allowed us to more precisely allocate partner rewards, which has 2 accounting effects. First, a one-off benefit largely in non-NII of circa GBP 45 million in Q4. Second, an ongoing change in income mix, reducing non-NII by circa GBP 50 million from Q1, offset by a broadly equivalent increase in NII. Q1 NIM will be around 12.5% with total income of circa GBP 950 million. There are considerable inorganic changes in the business in '26.

So to help with modeling, we have included some details in Slide 96 in the appendix. Following the sale of the AA portfolio in Q2, we expect NIM to rise to nearly 14% in half 2, supporting a circa 12% RoTE in '26 before the AA gain on sale. We ended the quarter with a CET1 ratio of 14.3%. This included 33 basis points of capital generation from profits.

Given this strong capital position, we have announced a GBP 1 billion share buyback and a GBP 0.8 billion final dividend equivalent to 5.6p per share. Looking ahead, we continue to expect between GBP 19 billion and GBP 26 billion of regulatory RWA inflation. Within this, the circa GBP 16 billion effect of IRB migration in the U.S. Consumer Bank remains our best estimate. Around GBP 5 billion of that will now happen with the implementation of Basel 3.1 on 1 January '27 with the remainder anticipated that year.

We expect a reduction in the group Pillar 2A requirement following each of these changes. We have been operating around the top of our 13% to 14% CET1 range, with the returns and distributions in the plan announced today based on that level. Post implementation, we will consider where we operate across the range. More broadly, in the U.K., we welcome the constructive tone in the recent FPC review of capital requirements and we'll continue to engage closely with the Bank of England.

Turning now to the RWA walk. Investment Bank RWAs decreased due to seasonality and accounted for 55% of group RWAs at the end of the year. The reduction in Barclays U.K. reflected a securitization in Q4 to manage risk on the balance sheet. As usual, a word on our overall liquidity and funding. We have a strong and diverse funding base, including a 73% LDR and an NSFR of 135%. And we are highly liquid across currencies with an LCR of 170%. These measures reflect purposeful and prudent management of our balance sheet, delivering resilience and thus ensuring we have the capacity to support customers in a range of economic environments. TNAV per share increased 17p in the quarter and 52p year-on-year to 409p. Attributable profit added 9p and 43p per share, respectively.

Movements in the cash flow hedge reserve added 5p per share in the quarter, and we expect this to largely unwind by the end of '26, adding around 9p to TNAV. To summarize, we are pleased with the group's performance in the second year of our 3-year plan, having achieved all our targets and guidance.

We now expect group income of GBP 31 billion in '26, GBP 1 billion more than originally expected. And continued operational progress means we are more confident in delivering target RoTE greater than 12% in '26. Venkat will now outline the next 3 years of the plan before I take you through the '28 financial targets in more detail. Venkat, over to you.

Thank you again, Anna, and welcome back.

Barclays is now on a journey to sustainably higher financial returns. I think of this journey as taking place in 4 stages. First, from 2021 to '23, we stabilized the bank's financial profile, exercising capital discipline in the Investment Bank while starting to build out our areas of strength.

Second, since the launch of our simpler, better, more balanced strategy in February '24, we've positioned the bank for income growth and for higher returns. We have simplified our processes to drive efficiency, and we exited nonstrategic businesses. We've invested in digital capabilities to create a better customer experience. And we've grown our highest returning U.K. businesses to create a more balanced Barclays with more stable returns.

Today, we set out the third stage of this plan all the way to the fourth. In this third stage, we will build on the foundations we have created so far to increase returns for the bank and to make them resilient across a range of environments. Year-by-year, we are improving the profit signature of the bank.

Stronger financial results create the capacity to invest to secure sustainably higher returns. This is the fourth stage, and it extends beyond 2028. Two years ago, we presented a vision anchored in measured ambition and disciplined delivery. I said then that we were building a potent set of businesses, which were strong in themselves and mutually reinforcing.

Our vision was harnessed to our home U.K. market, where we aim to deepen our presence even as we engaged with the world from London. Our vision today is one of accelerating ambition, still anchored in disciplined delivery. We will forge segment-leading operationally efficient businesses that are primed to support growth, and we will drive structurally deeper client relationships by connecting these businesses. We have more capacity to invest. We build upon a strong track record of delivery.

Our drive is greater and our commitment is unwavering. We will increase investments twofold to drive deep technological transformation and modernization of the bank. This includes embedding AI at scale across the group to deliver better products and services. And importantly, we will pursue our ambition while generating higher returns in each of the next 3 years.

In 2028, we are targeting a return on tangible equity of greater than 14%, up from greater than 12% for '26. Stronger capital generation will enable greater than GBP 15 billion of distributions across the period of '26 to '28. And this provides capacity for additional investment and growth beyond the levels set out in the plan today. And as we have done, we will exert considerable discipline over any investment given the importance, which we place on shareholder distributions.

In 2026, we expect the Investment Bank to represent a mid-50s percent of group RWAs. This is above the initial target, and it reflects the postponement of previously anticipated regulatory changes. We expect this proportion to fall to about 50% by 2028 as we continue to maintain broadly stable RWAs in the Investment Bank and deploy more capital in our consumer and corporate businesses.

We will continue to be guided by 3 goals, and these are to make Barclays simpler, to run it in a better way and to make it more balanced. Our journey began by creating a simpler business structure organized and operating in a simpler way. It continued with the simplification of our processes and customer journeys to improve the quality of our service and to drive efficiency.

In the next 3 years, we will be deploying digital capabilities and AI to further this progress. To harness these technologies successfully, we must standardize our data, we must modernize our approaches, and we must harmonize systems and processes. Delivering in this manner will not only enable greater productivity, it will improve our operational resilience, our reliability and security.

And importantly, and I'll come back to this, it will create a fulfilling working environment for our colleagues. For some time now, technology has revolved around our businesses. Now our businesses are revolving around technology. Customer interactions in the U.S. Consumer Bank are almost entirely digital today. Elsewhere in the group, we've made significant progress to build easy-to-use customer-facing platforms, and we'll continue on that journey.

By 2028, we will deliver a simpler but more sophisticated suite of products and AI-enabled services. So how are we doing this? Our transformation is built on 3 pillars: cloud computing, data platforms and AI adoption. To date, we have made the most progress in employing cloud computing built on scalable and robust infrastructure. We are one of the leading adopters in this sector with 89% of applications on the cloud versus 75% 2 years ago.

And this platform provides greater stability and faster product deployment. We are also migrating core data onto a standardized platform. This helps us to provide personalized services for our customers and to implement models more rapidly. And by building on these modular foundations, we can accelerate the development, testing and deployment of code and models.

So with cloud infrastructure and data platforms in place, we are now able to deploy AI at scale. Across the group, we have more than 250 AI tools and models in use. And by 2028, we expect more than half of our customer journeys in the U.S. Consumer Bank to be digitally personalized. Technology is creating a more stimulating working environment for our colleagues who are at the heart of these developments. And let me share some examples.

In the past 2 years, we've held a number of AI hackathons, where employees prototype quick solutions to existing business problems. Every time I visit a hackathon, including one just 2 weeks ago, I'm overwhelmed by the seemingly limitless ambition and inventiveness of our colleagues. And their winning ideas translate into actual projects and actual products. This includes an AI chatbot that we recently launched for FX trading. We call it Box bot. And this tool delivers FX quotes 75% faster than the previous approach. It is driving better execution for our traders and swifter service for our clients.

In the U.S. Consumer Bank, we are launching a conversational AI tool in our app. This accelerates customer query responses by 95% and enables more personalized service. We've also built the infrastructure and provided colleagues with tools to drive greater efficiency and productivity. In doing so, we enable them to perform in the economy of the future. The rollout of GitLab to 19,000 developers means we are now able to implement code 15% faster. And we are one of the largest users of Microsoft Copilot in the financial services industry with around 90% of our colleagues on the system.

In 2025 alone, this saved our teams more than 1 million hours of work. Insofar, I've spoken about improvements in the way we engage with clients and how they engage with us. I want Barclays to be renowned for operational performance, excellent operational performance. And to me, operational performance and financial success are 2 sides of the same coin. With 3/4 of our colleagues engaged in operating the bank, simpler operations can improve efficiency materially. So let me just highlight 2 examples to bring this to life.

In finance and Azeria, we are simplifying our accounting platforms, moving from 11 to 3 subledgers within the trading book. And this will lead to fewer manual reconciliations, faster reporting and more efficient data analysis. On the risk side, close to my own heart, our wholesale credit risk systems remain overly manual. And so we are rebuilding the architecture and using AI to aggregate and analyze data and generate reports. This supports fast and accurate credit decisions.

To summarize, the simpler Barclays is both well organized and well run for colleagues and customers alike. And at the beating heart of this is a standardized infrastructure supporting harmonized processes and enabling modern approaches to product development and delivery. And it's powered and curated by our talented and inventive colleagues.

Moving to better. Having a simpler business means we can focus on delivering better service for our customers, and this results in improved returns for our shareholders. In this next stage, we are building a better bank by forging segment-leading businesses and deepening client relationships. To me, segment leadership is built on 2 pillars: best-in-class offerings and deep client relationships. And we begin from a strong position. We are the largest non-U.S. investment bank with deep expertise in fixed income and financing markets.

We are a leading U.K. retail bank with an established and growing private bank and wealth management business. And our U.S. Consumer Bank is a highly sought-after partner for customers and corporate clients alike.

The second pillar of segment leadership is combining the strengths of our products in each business and our capabilities across businesses. In doing so, we create deeper client relationships. And there is significant potential to increase connections between Barclays U.K. and the Private Bank and Wealth Management through our premier proposition. The acquisition of BSG in the U.S. allows us to bring market-leading digital lending capabilities to our credit card partners. And as the only U.K. bank with U.K. investment bank, we bring a unique global reach and sophisticated capabilities to our U.K. corporate clients.

By investing to strengthen these connections, we make each business individually stronger. And by forging connections across the group, we will unlock sources, new sources of fee growth beyond 2028. So let me share how I think about this, and I'll start with the Investment Bank.

As I said, Barclays is the leading non-U.S. investment bank. We are U.K. domiciled, but we actually look more American than European with 50% to 60% of our revenues coming in the U.S. The Investment Bank has built a diverse and stable income mix.

Two years ago, when I stood in front of you, I said that improving the investment bank was the hardest part of our plan. So what have we done and how have we done it? At that time, we had asked our business to do 4 things: First, to leverage further the traditional areas of strength. And for a long time, fixed income has been the calling card of Barclays. This is true in trading, financing, debt capital markets. And in markets, we identified 3 focused businesses where we plan to grow income by gaining share, European rates, equity derivatives and securitized products.

We've made good progress, gaining share by about 150 basis points between 2023 and the first half of 2025. We have also leveraged our historical strength in fixed income financing to grow in prime.

My second task was to drive greater capital productivity. The business has consistently increased return on RWAs. Now we will build on those successes. The third request was to increase fee share. The bankers who we hired in 2023 and 2024 have become more productive. Early results are good, but there is more to do. And so we will continue to invest and realize the full benefits of this investment over time.

The final ask was to deepen relationships in the International Corporate Bank. And here, we've made strong progress rolling out what we call our treasury coverage model beyond the 1,500 top clients of the bank. And in the next 3 years, we will leverage strong transaction banking capabilities from the U.K. Corporate Bank and build on existing debt capital market strengths. We will be providing a more complete service to global corporates. And in doing so, we expect the International Corporate Bank to become a larger part of the Investment Bank by 2028. And this will remain an important source of fee growth beyond 2028, and I will discuss this later.

Turning to Barclays U.K. Barclays aims to be the premier bank for all U.K. customers. We have a strong customer base, including around 1.1 million, what we call mass affluent customers in Barclays U.K. Our premier proposition provides exclusive rewards and priority service for this cohort, but only 50% of eligible customers have a premier account. This provides a material opportunity to increase engagement. Investment to improve our service has raised NPS scores among premier customers, and we plan to enhance our offering further by expanding the product range and rewards.

We can also support this segment's investment needs more fully, and we will achieve this by strengthening connections between Barclays U.K. and Private Bank and Wealth Management. Within Barclays U.K., we have identified 400,000 customers who could benefit from financial advice.

In 2025 alone, we onboarded 65,000 customers to Barclays Direct Investing, which is the new name for our digital self-investment platform. And in 2026, we will launch Premier Wealth Management to provide planning and advice to Premier customers. This will be human-led, but digitally enabled, fairly priced, transparently constructed and clearly disclosed.

Turning now to the U.S. Consumer Bank. Our leading digital U.S. consumer bank is delivering strong growth and customer engagement. Our focus partnership business was among the top 4 fastest-growing credit card businesses in 16 of the last 20 quarters. And since 2023, we have achieved a 12% organic growth in receivables.

By driving growth and customer engagement in this way, we are retaining existing card partners and attracting new ones. Last year, we renewed partnerships with Upromise, Carnival and Wyndham Hotels, and we successfully integrated General Motors. Operational progress in the U.S. Consumer Bank is also driving higher returns for Barclays. We will continue to use our digital deposit capabilities. In fact, the launch of a tiered savings product in 2024, has enabled 34% retail deposit growth, with the cost of this funding being about 50 basis points below the funding it replaced.

And in doing so, we support the broader banking needs of our card customers. The acquisition of Best Egg n the second quarter of '26 will further expand the breadth of our digital capabilities. Around 90% of Best Egg consumer loan originations come through digital channels, including online aggregators. And Best Egg strong capabilities and enable flexible product design to suit a range of customer needs. We will leverage these capabilities to accelerate growth, including through closer integration with our card partners. So as you can see, the U.S. Consumer Bank is more than just a cards business.

I strongly believe that happy and satisfied customers are the cine of any enterprise. We aim to improve customer service by investing in it deeply, making it a point of ambition and pride. And as I said earlier, operational excellence and financial success are 2 sides of the same coin. I see them as the same.

In Barclays U.K., last year, we launched a new platform to improve materially the speed of more applications for more than 26,000 mortgage brokers. Digital adoption in the U.S. Consumer Bank is already higher than in any of our divisions. And as I said, we are deploying AI tools to improve personalization further and ease of use.

We're also making it easier for customers to come to Barclays, including in the Private Bank and Wealth Management division. Our digital platforms are a critical part of providing a superb experience to deepen customer engagement. This year, we will relaunch the Barclays app to deliver more personalized support through digital channels. Even as we emphasize digital engagement, we recognize that customers sometimes value the quality and depth of engaging with us in person, especially with complex issues and in important life moments.

So we will look to enhance and expand our branch footprint. This will enable us to tailor our services to meet the changing preferences of our customers. And in the U.S. Consumer Bank, we are leveraging our capabilities across cards, deposits and loans to drive even greater customer engagement.

The secret sauce in our investment bank is in our synergies, which we use to deepen client relationships. We are big enough to offer multiple sophisticated products to our clients, and we have the nimbleness and the cultural drive to customize delivery and create tailored solutions. We now rank top 5 with 62 of our top 100 markets clients. This is up from 30 in '21, 49 in '23, and we are on track of our target of 70 in 2026.

Our leading fixed income and prime equity financing products are integrated on a single platform. Operating in this way provides a single view of risk, both for the client and for Barclays. And of our top 100 markets clients, 97 are also financing clients.

So by continuing to leverage our integrated financing platform, we do 2 things. First, we build a stronger foundation of stable income, which supports returns in a range of environments. And second, we deepen relationships and drive greater engagement across the investment bank, including in intermediation. So over the next 3 years, we will bring together our investment banking and transaction banking strengths to accelerate growth in the International Corporate Bank. We are the top sterling clearing bank.

We have a comprehensive suite of products and differentiated payment strength. By replicating some of these capabilities in the U.S., we have already driven a circa 140% growth in dollar deposits since 2023. And we plan to leverage this strength in other products through simple, but complete digital channels. In Europe, we will also extend the reach of our existing product suite from 9 to 15 countries to provide a more complete client coverage. We are also creating a better client experience to support this growth. So by the end of the first quarter of this year, all U.K. corporate clients will be enabled on an enhanced platform that we call iPortal. This combines 5 previously separate platforms for corporate banking into one. And in doing so, we make it easier for clients to access a broader range of products.

Across the banking system, technology is not just affecting how we do business, it's also affecting what business we do. And nowhere is this likely to be greater than in new asset types and new payment methods. We are deeply engaged in understanding the role that digital assets will play in meeting the future needs of our clients. We are developing our own tokenized deposits to increase the speed and simplicity of transactions, and we are testing retail and wholesale use cases, including for corporate bond issuance and investment.

We have been structurally improving the profit signature of Barclays, and we're doing it in 2 ways. First, by changing the mix of the group by growing our highest returning U.K. businesses. And I'm pleased with our progress, having grown these businesses from 30% of group RWAs to 34% in the last 2 years. We also now expect higher returns in Barclays U.K. We will continue this progress, increasing lending by more than 5% annually while generating an RoTE greater than 20% across the 3 U.K. businesses.

Second, we said we would strengthen returns in the lower returning divisions. The U.S. Consumer Bank RoTE has increased from 4% in 2023 to 11% in 2025 in all the ways I described to you. And we expect this to build to mid-teens while absorbing regulatory RWA headwinds. And when I stood in front of you 2 years ago, I said we would increase returns in the Investment Bank by improving productivity on a stable RWA base.

And I'm very pleased with the progress to date. IB RoTE is up from 7% to 11% in 2 years, but we have more work to do. With greater visibility 1 year out to the end of '26, we expect the Investment Bank to generate circa 12% RoTE this year. And by 2028, we expect this to rise to more than 13% -- let me be very clear.

We remain ambitious for this business and for the returns it should be generating. And importantly, this should be done on a sustainable basis. More broadly, the ongoing change in the mix of RWAs across the group means that we are relying less on the IB to drive improvements in group RoTE. This is exactly as it should be.

In summary, the better Barclays will continue to show higher returns, and it will also be built on segment-leading businesses, which offer the best-in-client service and experience. Our third goal is to create a more balanced Barclays. We will continue to maintain capital discipline in the Investment Bank while growing parts of the retail and corporate businesses. But being balanced, being more balanced also means growing new sources of fee income beyond 2028.

Two years ago, I said that every global bank had to be strong at home. We've been a U.K.-centered bank for more than 3 centuries, and it remains a great place in which to do business and from which to do business. The economy is resilient. The legal and regulatory environment is both strong and trusted. And we remain committed to investing and growing in this our home market.

Our investment will focus on diversifying sources of NII beyond deposit income, and we will increase U.K. lending in 2 main ways. First, we will leverage strong multi-brand offerings to reach new customers. For instance, the acquisition of Kensington in 2023 enabled us to provide mortgages to more complex borrowers. And the acquisition of Tesco Bank added significant scale in unsecured and open market capabilities in personal loans.

Second, investment into the business is supporting growth by simplifying and improving customer journeys, as I discussed earlier. We are encouraged by progress in the U.K. Corporate Bank and expect momentum in core business -- core business banking lending to build in 2026.

Importantly, we expect to grow U.K. lending by more than 5% annually in the next 3 years, above the growth in nominal GDP. And we will do this by continuing to grow in segments where we were underrepresented and by leveraging our expanding -- expanded product range and capabilities. We will invest to support growth.

In the next 3 years, we plan to more than double investment to support growth and efficiency compared to the previous 3 years. We will accelerate the adoption of digital technologies and AI across the group. And investments in the next 3 years will be substantially more weighted towards new sources of fee income growth beyond 2028. Through these investments, we will continue to develop best-in-class offerings, which is the first pillar of segment leadership.

As I have said, we will also build connections across our business, and this is the second pillar of segment leadership. In the U.K., new capabilities will support customers across the wealth continuum. We will leverage U.K. transaction banking strength in the International Corporate Bank. and Best Egg will enable us to originate assets directly for investors in our leading U.S. asset-backed securities business in the Investment Bank.

So as we move beyond 2028, we expect more of our growth to come from fee income versus net interest income. And by building more diverse sources of revenue this way, we support more resilient returns and we position ourselves better to navigate a range of environments.

So changes in the operating environment globally present both risk and opportunities for large global banks like Barclays. And we look to manage this in 3 ways: First, by building strong customer businesses diversified by geography, customer, product and income type. Second, by deepening client relationships across products and where appropriate, across business segments; and third, through diligent management of economic, financial, operational and technological risks.

AI, for example, is a transformative opportunity, which contains risks that need to be managed. And so to harness the technology successfully, we are standardizing our data, modernizing our infrastructure and harmonizing our business processes. By approaching risk and opportunities in this way, we aim to deliver consistently for our customers with strong operational performance. And this, in turn, will generate resilient financial performance in a range of environments for our shareholders.

So to bring this all together, progress in the past 2 years provides a solid foundation for the next phase of our journey, and we are confident in the path to 2028. We're moving from a period of measured ambition to one of accelerating ambition. And now I'm going to pass it over to Anna to take you through the financial details of the plan. Anna?

Our confidence in the plan that Venkat has outlined reflects 3 factors. First, we plan on realistic assumptions that put delivery in our control. Second, the plan includes a significant increase in discretionary investment to support our future growth. And in doing so, we are intentionally prioritizing sustainably higher, longer-term returns over stronger shorter-term RoTE. And third, that delivery is grounded in existing momentum.

For example, target income CAGR of more than 5% compares to 7% delivered since '23, as you can see on the top row. Planned U.K. lending of more than 5% is in line with the momentum we've seen in '25. And we expect investment banking income to RWAs to increase by more than 40 basis points to greater than 7%, having increased 110 basis points in the last 2 years.

Our planning assumption is for a low single-digit IB income CAGR, '25 to '28 versus 9% achieved so far, and I'll come back to this in more detail. The low 50s target cost-income ratio in '28 represents more of a step change, but we are confident in delivering this, underpinned by circa GBP 2 billion of gross cost efficiency savings over the next 3 years. This compares to GBP 1.7 billion achieved in the last 2. And I will also come back to this topic in more detail later.

Stable income streams in the retail and corporate businesses will materially drive income growth in RoTE in the next 3 years. We expect modest cost growth, supported by planned efficiency savings and normalization of the elevated cost base in '25. This combination will deliver positive cost jaws in every year of the plan, yielding a low 50s group cost/income ratio by '28. So what drives income from here? As I said, in the past -- this mainly reflected management actions, but the environment has also been favorable, reflected in upgraded 2026 income guidance of circa GBP 31 billion.

As a planning matter to '28, we do not assume similar tailwinds in rates or in investment banking wallet growth. So we expect income CAGR to moderate to more than 5% in the next 3 years. Most growth comes from group NII, excluding the IB and head office, which has grown 8% annually since '23. This reflects the U.K. lending CAGR target of greater than 5% and the stability of our deposit franchises, which underpins the structural hedge, but it also reflects progress outside of the U.K. in USCB, where balanced growth and NIM expansion supported 11% year-on-year NII growth in '25. In '26, we expect group NII to increase at least to at least GBP 13.5 billion, up from GBP 12.8 billion in '25 and for Barclays U.K. NII to increase to between GBP 8.1 billion and GBP 8.3 billion.

Relative to our previous plan, the Investment Bank contributes relatively less against the flat wallet assumption. Over time, we do expect the mix of our income growth to pivot more towards asset-based NII and fees versus deposit income. That's why we remain very focused on diversifying sources of NII beyond deposit income by continuing to grow lending. But for the next 3 years, the structural hedge alone will deliver 50% of planned income growth.

We have already locked in GBP 6.4 billion of gross structural hedge income in '26 and GBP 17 billion over the next 3 years. We plan to fully reinvest maturing hedges as we did throughout '25 and to assume a reinvestment rate of around 3.5%. This is below the current 7-year swap rate of 3.9%, which has become the most relevant proxy given the hedge duration. The average yield of maturing hedges remains below this level in '26, '27 and '28 at circa 1.5%, 2.1% and 2.7%, respectively. This will result in continued structural hedge income growth, including circa GBP 1 billion in '26.

The increase in the average hedge duration to 3.5 years during '25 will reduce the quantum of maturing hedges to circa GBP 35 billion per year from around GBP 50 billion in recent years. This slows the pace of structural hedge income growth, but therefore, prolongs the expected positive effect until at least '29.

Also note, the higher proportion of equity hedge and longer duration of product hedges outside of the U.K. means it will attract circa 55% of growth in '26 versus 75% in '25. This change in mix is equivalent to circa GBP 200 million less income in Barclays U.K. in '26, which instead will occur in other businesses, including the Investment Bank. Two years ago, we set out a plan to increase the Investment Bank returns by improving RWA productivity and modestly growing costs.

Since then, income to average RWAs has increased by 110 basis points to 6.6%, driven by a 9% income CAGR against flat RWAs. In Global Markets, we increased RWA productivity by 60 basis points and grew RWAs to take advantage of the environment. And in Investment Banking, we increased productivity by 150 basis points and released RWAs. Further capital productivity remains central to the Investment Bank's journey to higher returns with a target of greater than 7% RWA productivity by 2028, having absorbed the impact of Basel 3.1.

In part, this will come from a continued review of the loan book, which is around 60% complete. Of the GBP 2.1 billion increase in income since '23, 2/3 came from Global Markets where we have built capacity. Financing income grew by GBP 0.6 billion in a strong industry wallet, and we achieved the '26 target 1 year early. This is particularly important given our focus on stable sources of revenue within the Investment Bank. In our 3 focus businesses and markets, we grew share by 150 basis points between '23 and half 1 '25 and income grew by GBP 0.4 billion.

In Investment Banking, we have meaningfully improved RWA productivity, which was our main objective. Progress towards our secondary objective to add scale through fee share has been slower, although banking fees grew in a market 30% larger than we had planned. Our objective now is to consolidate these gains. We will further deepen our relationships with our top 100 clients and markets and our 3 focused businesses and financing. And we will continue to build banker productivity, including in ECM and M&A, which are capital-light.

In financial terms, given a flat wallet assumption, our plan does not, therefore, include material benefits from wallet growth to 2028. We expect proportionately more growth from the ICB as we leverage the treasury coverage model and the transaction banking investments outlined by Venkat. This builds on the circa 140% growth in deposits achieved in 2 years. And as a result, we expect the International Corporate Bank to be a larger part of the IB, leading to more stable income overall.

Moving on to costs on Slide 66. We delivered positive cost jaws in each of the past 3 years and expect positive jaws in each of the next 3 years. This is a result of the income growth we've just discussed and modest cost growth to 2028. So what underpins this cost pathway? First, we don't expect around GBP 0.3 billion of one-off costs in '25 to repeat, being Motor Finance and around GBP 50 million of unrelated one-offs in Q4.

Second, we expect circa GBP 2 billion of gross efficiency savings by '28 split roughly evenly across the years. This includes around GBP 0.2 billion of reduced Tesco Bank costs. We will deliver this by modernizing processes and platforms to increase efficiency as Venkat outlined. These savings will more than offset the effects of inflation and business growth over the next 3 years. We expect annual investment costs to increase by around GBP 0.8 billion by '28, including circa GBP 0.6 billion from the acquisition of BST EG in Q2 '26. This will result in modest overall cost growth and a high 50s cost/income ratio in '26 with broadly stable costs thereafter to '28, supporting a low 50s cost/income ratio.

The Barclays U.K. cost profile is an important part of this overall shape, so let me briefly cover the dynamics here. Barclays U.K. has been on a transformational journey for several years, reducing the cost-income ratio from high 60s in 2021. Dual running of Tesco Bank added circa GBP 400 million to costs in '25, including GBP 100 million integration costs.

Other costs increased by circa GBP 200 million, net of efficiency savings. This was due to increased investment as well as the GBP 50 million one-off items I mentioned earlier. In '26, we expect a modest reduction in costs versus '25 and a low 50s cost income ratio as we continue to integrate Tesco Bank and invest in the business. By '28, we expect larger gross and net efficiency savings in line with the group and for Tesco Bank costs to fall by circa GBP 200 million. As a result, we expect Barclays U.K. cost to fall in each of the next 3 years, contributing to a mid-40s cost/income ratio in '28.

Our investments to date, organic and inorganic are delivering revenue growth across the group. Investment in the financing platform from '23 to '25 has, for example, supported 60% growth in prime balances. And our investment in the mortgage broker platform has supported more than GBP 14 billion of mortgage applications since its launch. We have also realized GBP 100 million of funding synergies on Tesco and significant margin benefits through Kensington as both acquisitions support U.K. lending growth. We plan to double annual organic investment by '27, focused on technology change and fee growth.

In addition, we expect operational costs of Best Egg of circa GBP 0.3 billion in '26 and GBP 0.4 billion in '28. This highlights the increased intensity of investment at this stage to support stronger fee growth and returns beyond '28. Cost discipline remains a key focus of our plan and is the lever that we have most control of. During '26, we expect a high 50s group cost income ratio improving again from 61% in '25. This reflects strong progress in the U.K. businesses in particular. And looking ahead, we expect further improvements to deliver a low 50s percent group cost/income ratio by '28.

Turning now to impairment. The group has operated around the through-the-cycle target loan loss range of 50 to 60 basis points for the past decade, and this guidance remains appropriate. It reflects 2 offsetting factors.

First, in Barclays U.K., lower arrears and high credit card repayment rates have contributed to our loan loss rate consistently below the through-the-cycle expectations. Strong mortgage affordability criteria and credit card quality supports structurally lower impairment in the U.K. market. As a result, we now expect a lower through-the-cycle loan loss rate in Barclays U.K. of circa 30 basis points versus 35 basis points previously.

Second, we expect a circa 500 basis points through-the-cycle loan loss rate in USCB. This is up from circa 400 basis points previously due to the changing portfolio mix. It will be higher in '26 as of some nonperforming American Airlines balances. Both effects will diminish in '27 and will be more than offset by higher NIM. During the past 2 years, we have structurally improved Barclays profit signature. The Investment Bank and USCB now deliver double-digit returns, and we plan to drive these higher whilst continuing to allocate additional capital to our highest returning U.K. businesses. By '28, we expect capital generation to exceed 230 basis points, an improvement of more than 30% over the next 3 years.

We continue to exercise disciplined capital allocation, first, by holding a prudent level of regulatory capital. As you have seen, we've been operating around the top of the 13% to 14% target range ahead of the expected regulatory developments that I discussed earlier.

Second, we will distribute greater than GBP 15 billion to shareholders by '28, subject to regulatory and Board approval.

And third, we will maintain capacity for selective investments to support structurally higher returns beyond '28. Given the strength of capital generation, this capacity does exceed the level of investment set out in the plan today. As we have done, we will exert considerable discipline over any investment given the importance we place on shareholder distributions.

We expect a progressive increase in our total payout in 2026. We are also evolving the mix of distribution to reflect the growing consistency of capital generation and to recognize feedback from shareholders.

In addition to the move to quarterly buybacks announced in Q3, we plan to increase the dividend to GBP 2 billion in '26 from GBP 1.2 billion in recent years. While we continue to prefer share buybacks, we will review the mix of distributions periodically to reflect the level of our returns and the preferences of our shareholders. Bringing this together on the next slide.

Operational progress during the past 2 years means we are confident in achieving our '26 targets and guidance. But momentum across the group also underpins our confidence in delivering the '28 targets outlined today. We are focused as ever on driving greater efficiency and operating leverage, protecting returns in a range of environments, and we will drive structurally higher and more sustainable returns beyond '28 by investing to support more diverse sources of income and fee growth. Over to Venkat for final remarks.

All right. Thank you, Anna. So 2 years on since our investor update in February 2024. As we've discussed, we remain on track to deliver our goals. We are moving from a period of measured ambition to one of accelerating ambition. We aim for sustainably stronger returns, greater shareholder distributions and operational excellence.

The targets which we have shared today are underpinned by structural improvements to the profit signature of the bank, which we have made in the last 2 years and our drive to become a simpler, better and more balanced bank. We plan to continue this progress in the coming 3 years. And of course, our journey does not end in 2028. Our ultimate aim is to secure structurally higher and more resilient returns beyond 2028.

So now I'll pause for 15 minutes for a break before Anna and I open for Q&A. What shall I say, 10:40 U.K. 10:40 London, please be back in the room. There's refreshments outside, restrooms outside, and we'll be back.

[Break]

Thank you. Welcome back. So we will go to questions in the room.

[Operator Instructions]. So I'll begin with the person who raised his hand first and who taught me a lot of what I know about analyzing backs. Just for that, he gets preference.

Two questions. The first question is on the capital return of over GBP 15 billion. If you could just put this in context of capacity to support investment and growth. How should we think about this capacity that you're outlining? It looks like there's quite a bit of buffer. So we would like to understand that.

And then secondly, you're one of the few CEOs who actually discusses ledgers and middle office integration, which is not a -- it's a hot topic, but a lot of...

Will bring programmer, so that probably helps.

That's probably -- and probably because he came from the same organization that I'm from, which is a big focus. But trying to understand a little bit the investment phase, which has stepped up in '26 significantly. And you're going from EUR 1.1 billion to EUR 2.3 billion of investments. And just what the focus is and how should we think about post '28 basically in that respect?

Anna, do you want to start on the capital and then we can come back to the other one.

Yes, sure. Thanks, Kian. So one of the hallmarks of this plan is the level of capital generation. We've talked about that. And really, when we talk about an improving profit signature, that's really what we mean. It's this chart here that they've just brought up showing that sort of change to 230 basis points. And in the plan, what we've done is we've meaningfully increased the distribution to greater than 15%, but we've also meaningfully, in fact, doubled the level of investment. But such as the level of capital generation within the plan, -- the level of generation actually surpasses both of those 2 increases. So what we've done here is we've deliberately created some capacity for us to be able to invest further if and only if we determine that is the right thing for us to do.

And I'll just remind you of our very clear capital hierarchy here, specifically the importance of shareholder returns. So we're going to set a very, very high bar for any additional level of investment. And quite frankly, if we are unable to find such an investment, then the capital hierarchy will kick in, and we will distribute more than we have here in the plan. Or alternatively, we will be investing more than we have here in the plan, and we would expect the momentum of the business in the outer years to be higher than we're presenting here.

We have no inclination, no objective here to hold on to higher than required levels of capital. But what we're trying to do is create some capacity to underpin some of the meaningful opportunities for growth that we have, whilst meaningfully stepping up that level of distribution. Venkat?

Yes. And I would say, I think if you look at our track record of investment, Anna spoke about the investment which we had made in our prime and financing business and both the quantum of investment and the payback. You saw the quantum of investment in even the mortgage broker application and the payback. We look to make investments where you would get the revenue realization fairly quickly. And you see that even of Kensington Mortgages and Tesco and Bodweilling Best Egg. So we are looking to do that. And we need to keep that capacity for that reason because opportunities will be there and needs will be there.

I would say, Kian, on the second question about subledgers and the sort of the guts of the organization, it comes from both a philosophical place and from the actual reality of the business. The philosophical place is, as I said, for a long time in this industry, the businesses -- technology has revolved around the businesses. Now as you see not just in us, but across the industry, the depth and extent of technology-based services, products and delivery, the businesses are revolving around technology.

And what that means, especially if you're going to take advantage of the promise of new technologies like AI and cloud computing is that you've really got to, as I use the word, harmonize your processes and standardize your approaches and especially when it comes to data platforms and to the way in which you construct and store your data, the way in which you do computing, the way in which you build models and the way in which you deliver. And if these things are not standard, you add huge complexity. And so we've got to unravel that complexity. And in large complex GSIs, that's a big task, and that's what we are trying to do. All right. Alvaro?

One of them is actually -- sorry, Alvaro Serranoa from Morgan Stanley. One of them is kind of a follow-up to the second question maybe for you, Venkat. In one of the slides, and you pointed out that 75% of the employees are functions, I think support functions. And obviously, one of the -- at least for me, the surprise of the plan is the cost element as you were referring to. During the plan, how is that number going to come down during the plan in 2028? And beyond that, how low do you think it can go because it's obviously one of the core pillars.

And second, more -- maybe a more financial one on, again, maintaining the RWAs flat in the Investment Bank and one of the things coming out is ongoing RWA efficiencies. Is there anything -- maybe this one is for Anna, but is there anything you can point us to that is pretty mechanical around the way the business is done in investment banking, maybe less legacy LBO business, more sort of private credit capital-light businesses that we can gain conviction that mechanically the RWAs are going to be flat, I don't know pointing out to a proportion of contribution today versus 3 years out, something that will give us confidence that we can keep it flat.

We're going to tag team on both these questions, Alvaro. So first of all, on the cost, just a definitional point. When we call support functions, there's a bit of a legal entity aspect of Barclays. This is what we call Barclays Execution Services. And this includes technology and operations, but it also includes compliance, risk, finance, HR and legal. And so it includes basically the non-revenue generating parts or direct revenue-generating parts of the business. So that's the first thing.

The second thing, as I've said, and I'll have Anna chime in, we don't have an explicit target in terms of number of employees. What I've said is there will be productivity benefits from all these investments. We hope to harness this productivity benefit in improving the quality and delivery of services, whether that is to clients or whether that's internally, right? And there will be obviously a gross efficiency cost savings that we've outlined and investment in the group. But we are not outlining a particular people target. I think we are approaching this from something that creates efficiency in order to provide enablement -- and then we'll see where we go. Anna?

Yes, sure. If I can just add to that. Our real focus from here on in is really on that technology efficiency. So the majority of cost out, if you like, the efficiency is going to be driven by change delivery, by platform modernization and the kinds of things that Venkat was talking about, about enabling products to market, if you like, much, much faster than we have done before. So that's where we see the sort of meaningful change, if you like, in the cost base. Shall I start on RWAs, or do you want to add?

Yes, you do. But just one thing. It's no accident that the most digitally enabled part of the bank, which is the U.S. Consumer Bank, also has our lowest cost/income ratio, right? It's no accident. Go ahead.

Yes, sure. So on RWAs, I mean, this is not a new thing for the IB. They've been flat for 4 years. They were flat for 2 years before we started the last plan. And whilst we've made considerable progress, 110 basis points, we do think that there's more to go here. And I'd just call out -- so let me talk about a couple of whats. The first would be, if you remember when we did our investment banking deep dive, we talked about that review of the loan book being really good stewards of capital.

We are 2/3 of the way through that review with 1/3 to go. And it might be helpful actually if we can bring up the slide that's got the relative revenues over RWAs, and you'll really see what's happening in investment banking. At the same time, so it's that bottom right-hand chart that I'm calling out there. So absolute levels of RWAs have been coming down in banking as we have reviewed that loan book. That's allowed us to be much more nimble in how we deploy RWAs across the Investment Bank and really deploying them at the moment, as you've seen, in markets just because the market opportunity has been there.

The other thing I would call out is much of our growth that we're really leaning on from here on in, some of the things we talked about before, so M&A and ECM, but the international Corporate Bank is a really big part of this part of the plan. It's made tremendous progress in the last 2 years. And that again comes from the treasury coverage model that we talked about in our deep dive. We've increased our deposits by 140% here. And now we have the opportunity to really leverage that by deploying the technology that Venkat is talking about and really driving fee products from here. So we are confident in that trajectory. Venkat?

Yes. I mean I just add to what Anna said, I mean, structurally, it is the International Corporate Bank and transaction banking. It is the continued growth in our prime businesses, which revenue per unit RWA because of just the way the lending is structured is generally better. It is over a very long period of time, the way lending and banking has been changing from direct lending on individual credits to portfolio lending. But that's over a very long period of time. But it's the thing Anna said, it's corporate banking. It is an emphasis on fee businesses and also at the right points of the cycle intermediation. Yes, go ahead.

It's Guy Stebbings from BNP Paribas. The first question was on capital in terms of targets. You got the 13% to 40% target. I think you've talked sort of running at the top end of that range throughout this plan. And given this is the plan now to 2028, post Pillar 2A changes given the constructive tone from the regulator. I'm just wondering what do we need to see to sort of potentially move lower down in that range as sort of a formal way you're running from the business? Is it just getting that Pillar 2A change from the regulator?

And presumably you've got pretty good visibility as to what you're expecting there. So if things do land as you expect, maybe you could help sort of frame that so we can think about what that means for capital return and RoTE targets.

And then the second question was on the mortgage book in the U.K. You referred to the headwind in the first half of this year. Can I just check in terms of the definition of that headwind? Is that sort of a gross headwind? Because I'm mindful that with Kensington and the sort of flow of the book, you might be able to offset some of that as you have some higher LTV, higher-margin business coming through. So can you kind of frame the definition of that headwind?

Yes, sure, Guy. I'll take both of those. So on the first one, if you go back to the beginning of '25, what we said was that because we were carrying more Pillar 2 in advance of IRB implementation, you should expect us to operate at the top of the range or towards the top of the range. That's still what we're saying. It's no different to that.

And I do expect there to be some Pillar 2 offset when we get through Basel 3.1 and IRB. I just don't know what they are right now. And what we are trying to do in every single part of this plan is put it in our control. We want our distribution plan to be underpinned by the things that we are doing and that it can't be put, of course, by the timing of regulatory change or the certainty of that change. So that's all we're saying here.

So for us, in the short term, our planning assumption or actually throughout this plan, our planning assumption is that we will be at the top end of the range. And that's obviously -- you should reflect that in the way you think about our distributions, you should reflect that in the way that you calculate our RoTE. But once we get beyond that implementation and we have that clarity, we will, of course, review where we think we should be within that range.

I mean we still think that the 13% to 14% range is the right range for Barclays. But at this point in time, we just don't have the regulatory clarity, and we want this plan in our control. So that's the reason for it.

On mortgages, I'm specifically talking about a gross impact, and it relates to the mortgages that were written at the very end of 2020 and beginning of 2021. So as you remember, as we were all coming out of COVID, there was that stamp duty holiday and the mortgage market was very substantial. Those mortgages were written at very wide spreads, like 160 basis points -- that's quite meaningfully different from where we are now.

So just as they refinance, you're going to see some relatively short-term pressure across the market as a whole. We think it will be gone by the end of half 1. And then beyond that, you're going to see the kind of progress that you've seen in our NII to date. But it is a gross impact. We're obviously enjoying very good levels of net lending driven very much by Kensington and that broker platform. So it's a short-term hiatus, I would describe it as.

If I may just underline one thing, whether it's capital or looking at our RoTE, there are potential tailwinds, right? We are planning prudently, but what Anna is referring to, whether it's the new capital rules and what relief we get, there are potential tailwinds. We are not banking. Sorry, go ahead. And I'll come back to the back in a minute.

[indiscernible] bank and wealth management? What products are you currently missing from your Premier Banking proposition? And how easy is it for you to build those yourself? And then secondly, to continue on the U.K. loan book. U.K. retail banks continue to surprise to the upside on loan book growth relative to GDP. I think your guidance is for a 5% loan growth CAGR out to 2028. What's driving the growth in excess of GDP? And what's your outlook for volumes in the mortgage market for the next couple of years?

Let me start on both. We've got a pretty big and complete product suite. There are a couple of gaps in the product suite that are missing, SIPs, junior ISAs that are coming online. But if you put yourself at a higher level looking at it, starting at the self-directed end of the spectrum, what we've got is direct investment, what we used to call smart investor, which is you basically do-it-yourself investment buying stocks, bonds.

Then you come to the next piece, which is planning and advice. And that is where we are doing some work, as I said, to create products, which we will talk to you about soon, which are clearly constructed, fairly priced, transparently built and cheaply distributed and sorry, efficiently distributed. And there, we are looking to grow in scale, and we've got the basic product set. And then we've got our private bank, both domestically and internationally, was complete. So I would view it more as a scaling journey than as a completion of product capability. And that is our goal.

And look, I think more broadly, the U.K. is a nation of savers. I think it needs to be more of a nation of investors. I think we're going to have a broader tailwind and support for this. I think it's an important role for banks to play, and you'll see us emphasize it.

And then if I come to loan growth above GDP, let me begin and then Anna should fill in. We've said 5%, as you say, loan growth versus nominal GDP of 2%. Basically, there are parts of the business in corporate banking and business banking and even in parts of personal loans, where we were underrepresented in the last number of years. Tesco has given us the capability in personal loans, and you can see the increase. You're seeing the increase 18% growth in lending in the U.K. Corporate Bank. If you look at the U.K. Corporate Bank broadly, still loan to deposits is like 35%, 34%. So we have a lot to grow, right, versus what you might normally expect from somebody. Anna?

Yes. I mean, simply put, Ben, I think it's a combination of capability, increased capability. So we talked a lot about the mortgage platform. Actually, we're doing very similar things within the corporate banking environment, making it easier for that customer or client to engage with us and making that journey efficient, quick, giving them certainty, et cetera, that's making a really big difference. I think also the sort of broader product architecture that Venkat talked about, we see it in cards across multiple products. We obviously see it in our mortgage business. So we're just going to market with a much, much broader range and certainly, more of a step change than we've had sort of 2 or 3 years ago.

What it isn't is price and what it isn't is risk. So you can imagine as CFO, I've got a very keen eye on those things. So if you think about our corporate lending, it's up by 18% year-on-year. We've got more than 1,000 new clients in 2 years. About half of those are driving some of that lending. But as I look at the risk profile, it's not changed since the beginning of the plan. And as I look at the portfolio margin, it's not changed since the beginning of the plan. So it's really technology, intention to lend and I would say, breadth of product.

Go ahead, please.

Two with ACR. I think today in guidance, it's the first time you've pointed us to the 7-year swap rate from the 5-year swap rate on the hedge book. Could you talk about, is there a change in kind of the duration targeting there? And what gives you the confidence to make that change, looking at the deposit betas, et cetera?

Yes, sure. Thank you, Tim, for the question. So we actually extended the length of the hedge last year, taking it from roughly 3 years to 3.5, and that's why the 7-year swap rates becomes the most relevant rate. That really follows the observation of customer and client behavior because what we do is every single month, we are looking at how the deposit books perform across retail and corporate at a very, very granular level. And what we were observing was really that the customer and client lives were lengthening out, and we were getting more confidence around that. So it's purely a reflection of that change.

So on the Investment Bank. If I look at your 2026 targets, previously, you had a greater than 12% return target. It's now circa 12%, a high 50s cost income is now circa 60%. I'm assuming the change is primarily due to FX, but perhaps you could firstly confirm that.

And secondly, when I go back 2 years and think of the original plan, a lot of the revenue growth was assumed to come from market share gains, and you actually assumed a fairly flat wallet. Actually, what's materialized is a much better wallet than you expected, but flat market share. So perhaps you could also just talk to competitive dynamics and how that's played out versus what you thought 2 years ago and how that then fed through to your '28 assumptions as well?

And then on the U.S. Consumer Bank, I just wanted to understand some of the moving parts because you talk about greater than 13% NIM for 2026 full year.

But I think in your earlier commentary, you said 12.5% for Q1, 14% for the second half post the AA sale. So presumably it's the 14% you would argue we should be thinking about into the outer years. But then similarly, on the loan loss ratio charge, you're actually assuming that's coming down even as the exit NIM is higher. So perhaps you could just square the circle there.

Okay. Shall I start and then I'll hand to you on market shares, and then I'll take it back on. Okay. Thank you. So Andy, you are correct. The material moving part between the last plan and this plan is we previously planned on $1.27, we're now planning on $1.35 dollar rate. Now that has no impact on group capital, no impact on our ability to distribute. But in particular pockets of the bank, you see some concentrated effects. And EIB is one of those. You're going to see it in USCB as well.

So that movement in FX is worth about 50 basis points. So all we're doing is we're just truing up our expectations. We're pleased with the progress that it's made so far. I'm not going to mark that plan to market every single passing quarter. It's just that as we're resetting targets, we felt like it was the appropriate thing to do. Venkat?

Yes. And I think -- on the other side, what I would point to is, look, on the investment banking side, banking per se, as I said to you, we would like to see greater fee share. What you've seen so far is progress from the hires and the investments we've made, but -- and you've seen greater revenues, obviously, and excellent capital discipline. And as we make these investments, we hope to see the fee share.

On markets, I would point you to the fact that in the 3 focus businesses, we've done what we said we would do, and we've done it a year early. And as well as the number of our top 5 clients among the top 100 clients for whom we are top 5, that has gone from 30 to 50 to 60. So there is structural progress being made in these elements.

Okay. Can we bring up the slide at the back of the deck, I think it's 95 or 96, please, on U.S. Consumer Bank perhaps just to help this -- 96 Perfect. Thank you. So Andy, you're right. There's a lot going on in U.S. Consumer Bank in 2026, specifically being driven by the fact in Q2, we expect to exit the American Airlines partnership, and we'll also purchase Best Egg or complete the purchase of Best Egg in the same quarter. So firstly, that has a NIM impact. So I expect the NIM to go to around 12.5% in the first quarter. What's driving that? Well, it's just the accounting that I called out earlier. It's a movement between non-NII and NII.

Then we've always said that because American Airlines was such a high-quality portfolio, the NIM on it is relatively low, but also the loan loss rate on it is relatively low. So taken together, it was a relatively low returning portfolio because it's super prime. So what happens when that leaves the portfolio is the NIM will go up further. And so you're right, in the second half of next year, I'm expecting, if you like, a clean run rate of NIM, which looks more like 14%.

Now when I come to loan loss rates, that same impact is going to take us from 400 basis points to 500 basis points, but that will be more than offset by NIM. During '26, in isolation, what you're going to have is a couple of impairment effects. The first is, if you recall, when we buy something, we bring it all on at Stage 1. So it has to mature through Stage 2. So you get what we call stage migration. You're going to get that in the general Motus portfolio. So that's going to elevate impairments slightly.

And then for a period of time, we're going to be holding on to some nonperforming loans from the portfolio that won't go with them on the sale. So those 2 things together are going to show a little bit of elevation during 2026. So that's why I'm guiding you to around 550 million, but ongoing, 14% NIM and 500 loan loss rate.

Nothing to add.

Sorry, I forgot that this was working. Pui Mong from Bank of America. So thinking about the income guidance at the group level, so it's greater than 5% CAGR. And within that, obviously, Investment Bank is probably below and the Consumer Bank is above. And with the U.K. part also growing volumes greater than 5%. I'm just trying to think about what does it imply about margins. So in terms of product margin, that is, would you expect more of that growth -- income growth coming from the volume side? Or are we basically past the point where deposit margin is growing very substantially because of the hedge? And obviously, '26 will probably be a bit higher because of the more of the hedges coming through in '26. So in '27 and '28, how should we think about the margin piece? That's number one.

And number two is that -- so it sounds like Investment Bank RWAs is going to stay relatively flat because you still expect that to come down to about 50% of the group by '28. So roughly speaking, it's not much more to the Investment Bank. And the cost guidance at a group level only modestly growing from now to '28. That suggests investment bank is not getting very much cost either. So I'm just trying to think about why you've decided to do that in the context that, obviously, the IB probably is one of the businesses that has performed above expectations in the last cycle. And increasingly, there are questions about with the U.S. peers investing more and putting more capital behind the IB, why would you choose not to do something?

I'll let Anna take the first question, and she can start the second, and I might come in.

There we go, the plan. Thank you, Perlie. There's a lot in your question. Let me try and unpack it a bit. So how do we think about product margin in the U.K. is, I think, your question. So look, there's a bit more to go here. And you can see that from the -- can we go to the structural hedge slide, please? Thank you. Okay. So we are assuming that we are going to be reinvesting the structural hedge at 3.5%. The maturing yield over the next 3 years is materially below that. So 1.5%, 2.1%, 2.7%. So you're going to have a considerable hedge tailwind across at least this plan, probably beyond. And everything that we've done around the tenure of the hedge and extending it from 3% to 3.5% is only going to increase that momentum for longer. So that remains there as, if you like, an underpin for product margins.

Then if you think about lending more and particularly within our credit card business, all of the volume that we've written over the last 2 years coming to maturity from its promotional balances, that will start to increase the interest-earning lending in the credit card book. So we expect those things to continue. Now what we're not doing here is planning for any expansion of product margin really, though, because what we've said implicitly is that the growth that we're seeing in lending and some of the margin pressure that we're seeing in the U.K. market pretty much broadly offset. That's our planning assumption.

Now it may turn out differently to that, but we are not assuming that product margins either as a totality, if you like, Ply, get either better or worse, if that makes sense. You just continue with that hedge grinding in the background, products is broadly a wash. That's how we think about it or that's how we planned for it.

In terms of the Investment Bank, Look, what we're trying to do here is construct a plan that is carefully constructed, okay? We're trying to put as much of it within our control as possible. So we're planning on a flat wallet. We're not materially expecting any market share change in markets. We expect some in investment banking.

The pressure here in the plan is coming more from transaction banking, but that's where we're directing our investment. But don't conflate careful planning and lack of ambition. Because what we will do, of course, if the opportunity presents itself, then we will monetize it as we have done to date. Venkat?

I will emphasize that last point. I must say it's nice to be getting a question about why we shouldn't be bigger in the investment bank. But I think we've targeted -- we've been very clear to you over the last couple of years about where we are roughly targeting the IB as a percentage of the group. I think what you should expect us to do is exactly what Anna said, which is we're making a plan based on an assumption of a wallet. If there is opportunity, we've done it in the last number of years, which is we take advantage of it. Yes. Sorry, let's start, Chris.

Chris Hallam from Goldman Sachs. Just a question on the Investment Bank to begin with. Are you able to give any color on perhaps how much leverage exposure is tied up in the Investment Bank? I know we talk about RWAs, but as we shift towards the growth you're seeing in the financing businesses, how relevant that metric is.

And when you talk about flat market share in Global Markets, is that a conservative assumption or not given, I guess, the dereg story we're seeing building in the U.S. and also the ambitions one of your European peers has in FIC, specifically in the United States?

And then the second question is more broadly on AI. I think -- or I assume behind the scenes going through all the planning, you've looked at a lot of the opportunity set in that area. It feels as though more generally, there's a narrative that the technologies are becoming more impactful, but perhaps the speed at which you can get them into the enterprise is taking longer than people had expected and maybe slightly at a higher -- slightly higher cost. Is that a fair narrative or one that you would agree with when you think about the work you've done behind the scenes on this topic?

You want to go with the first one?

Yes, sure. So thanks, Chris, for the question. I mean we don't talk about return on leverage balance sheet a lot with this community, but you can imagine we're very focused on it in the background. And there are -- you're right, there are 2 big parts of the bank where leverage is deployed probably most extensively. One of them is obviously retail mortgages. The other one is financing within the Investment Bank. It's very high RoTE business because it's essentially secured lending, but it does consume leverage balance sheet. That's why we have the AT1 strategy that we have. And we're always thinking about what are those returns on the leverage balance sheet versus the cost of those AT1s. That's how we think about it in the background.

We have deployed more leverage in the business over the last few years, but so have our U.S. peers. And our perception to date certainly is that they have not been leverage constrained in the way that they have addressed that. And despite that, we've grown the balances by 60%. So it's a business, of course, we're focused on the returns across many lenses, but we're happy with where it's going.

Yes. I'd also say one of the things about the bank and the way we're building the bank is that we have lots of options and lots of opportunities. So just as you have 2 areas which consume leverage, you've also got the U.S. cards business, which helps you offset that because it's capital dense, relatively speaking. And what we are doing on the personal and unsecured side in the U.K., which is also relatively more capital dense. So I spoke on one of the slides about balancing product, income type mix -- all these factors are coming in to create the portfolio which we have.

Yes, sure. I think back to you on.

Back to me on AI. Yes. So you're right that I think what people are finding is that it's not just sort of enabling a particular type of model or a particular capability on everybody's computers and then get to work. So you have human adoption and then you have, more importantly, the ability to get it to work in the system.

To get it to work in the system requires 2 things or 3 things. One is the basic infrastructure, then adding the capability and then the third, the willingness to reengineer your processes. That is what we are trying to convey in the slides we spoke about on technology.

So the basic infrastructure is about both data and computing. Then on top of that, you build the model capability, which exists in some of the computing platforms, but which you might put on your own.

And then the third is the commitment to reengineer processes, and you've got to really do it end-to-end. So whether it is that box bot, whether it is what we are trying to do in credit risk, whether it is what we are trying to do in U.S. cards in the U.S. Consumer Bank and customer service, you can't leave pieces of this undone, okay? And that's the deep organizational commitment. So we recognize it. That's what we are finding behind the scenes, as you said, but we're trying to pick the right projects that will have the biggest impact on the bank and see it through from beginning to end. Yes.

So another question on the income planning assumptions.

Sorry, can you introduce yourself?

Sorry. Yes, Mike Houlton from BNY Newton. There are some that you talked about that do seem relatively conservative. Now whether they will be or not, we'll see over the planning period. But to the extent that they are and revenues are better, income is better than you're planning, should we expect as investors for that to flow to the bottom line? So profits are better, RoTE is better? Or over the course of the plan, would you invest that away, maybe make additional accelerated investments in the business such that you still hit or maybe beat your plan by a little bit, but you improve the sustainability perhaps of the profitability, pull some investments forward. So beyond '28, you're set up even better.

Do you want me to start? Okay. So Mike, the first thing I would say is that our targets that we've given you have very deliberately got a greater than sign in front of them. So we're balancing a few things here. The first is that, as I've said a few times, we want to put this within our control, the delivery of the plan. That's really, really important to us and particularly the delivery of the distributions of the plan. So that's number one.

Number two, we are balancing here the longer-term growth of the firm. So Venkat has talked a lot about the additional investments that we have and will continue to make. I mean, between Venkat and I, it would be relatively easy for us to optimize the returns of the firm across a short-term horizon. That is not what this is about. We are really balancing here, investing more in the business, and that means that the RoTE in the shorter term are probably a bit lower than they would otherwise be.

But we think it's really, really important to create a Barclays for 2 years' time when we're standing up maybe during the next phase of the plan, the third phase of the Trilogy, where we're talking about '28 and beyond. We want that momentum to continue. So that's why we've -- not so much on the income forecast, but when I was talking before about the capital capacity of the plan, that's exactly what I was driving at, our ability to flex our investment pathway if we feel that's the right thing to do.

But every time we are doing that, we are considering what is the returns on that investment relative to either the business as it stands now. So is it going to enhance those returns further? Or how does it look like versus the returns of a buyback? So we're thinking about all of those things as we deploy that.

Yes. I mean it's going to be -- we've presented a plan to you that is based on prudent financial planning in the way Anna has said, but we want to create a deep infrastructure for this bank, make it, as we said, returns in different environments, good produce strong returns in every -- through different environments and sustainably higher returns in the long run, which is a combination of investment and shareholder return, right? Sorry, going to the back and then I'll come here.

It's James Invine from Rothschild & Co. Redburn. I've got 2, please. Anna, can you talk about your thoughts on kind of deposit volumes and spreads in Barclays U.K., please? So we saw a pickup in volumes after a few quarters of kind of flat to slightly down. And I think as well, your U.K. net interest income guidance kind of implicitly assumes quite a bit of deposit pressure. So is that migration? Is it product spread pressure?

And then, Venkat, just back on the Investment Bank. I mean, it sounds like you're very theoretically open to putting more investment in there. But what actually has to happen? So the revenue on risk-weighted assets has gone up. You're talking about a 13% plus RoTE. How much higher do those numbers have to go before you think you'll give this business another GBP 20 billion of risk-weighted assets or something?

Okay. So on U.K. deposits, you can see that the deposits are up quarter-on-quarter by around, I think, GBP 3 billion if we go to the slide. What we continue to see, though, James, is we do continue to see some competitive pressure in the U.K. and specifically that move towards fixed or time deposits.

Now seasonally, I would expect some concentration of that in Q1, Q2 just because of the ISA season in the U.K. We always see that. And it feels like as a market, we're well primed to see that. But we are pleased with that deposit progress. What does that underpin? Well, I think just continued improvements in the business. I would say that we've deployed our multi-brands in deposits this year. We don't really talk about that.

We talk about it a lot in assets, but we are going to market with a much more sophisticated product architecture in deposits because we are now deploying the Tesco brand here. So that's really helping us. But we are not assuming from here that there is any real easing in that deposit environment. It may happen, it may not. But as I say, we're trying not to make significant market assumptions. Venkat?

Yes. So on the Investment Bank, first of all, investment comes in different ways. Investment comes in people, investment comes in technology, particularly in the markets business and then investment can come in RWAs.

What we've spoken about on the balancing side is basically Investment Bank RWAs as a percentage of the group, where we've set a target of around 50% seems right. We've also indicated flexibility around that number if there's a little opportunity, but 50% seems right. We have been investing heavily on technology and people. And we've spoken about it, whether it's bankers, whether it's trading capability and of course, electronic trading capability. We spoke a little earlier about the investments we've made in Prime.

So there's been and continues to be tremendous investment in technology and capability. Some of this or a lot of it is going towards things that are relatively capital-light and relatively high in fees. So we are prioritizing stable income. We are prioritizing corporate banking. And of course, electronic trading, which helps with our intermediation. And on the capital side, as I've said, there's a balancing act, and it's about 50% is where we would aim to target. And to get there right now, IB RWAs have to be relatively flat.

On the left-hand side, you've got Chris, Jonathan and Amit who are being incredibly patient. So...

All right. In that order, Chris.

It's Chris Cant from Autonomous. If I could just ask one point of detail and then on the IB again. So your effective tax rate has been quite difficult to predict over the last couple of planning periods. If you could just fill that gap in our models, I think that would be appreciated by all. And then on the investment banking side of the equation in terms of stable market shares, I guess one obvious development that's probably coming down the tracks at you in the next 12 months is this regulatory change in the U.S.

So are you seeing at the moment any change in the competitive environment? And do you make any allowance in the plan for a potential contraction in product margins as some of your U.S. competitors get more capital capacity, some of which is likely to be deployed into the IB?

Okay. I'll start with the tax rate. So Chris, I'm not going to give you a tax forecast. But I recognize that quarter-by-quarter tax can be a bit lumpy because it relates not only to the changing shape of the business, but also things that may have happened in the past. So I would encourage you to look at it over a sort of full year basis, maybe for the last couple of years and start from there. And always, if we've got significant tax impacts, we typically call them out for you. So start with that.

And Chris, just to clarify, by regulatory change, do you mean capital regulations in the U.S.? Or do you mean individual banks that might be under regulatory structures now that might lift?

More the former?

The former. Right. Look, U.S. capital regulation is very likely diverging from what's there in the U.K. and what's there in Europe. We have operated this investment bank through multiple capital regimes in different locations, and we adapt. The question is then how do we adapt? I said earlier in our presentation that the secret sauce of our investment bank is the synergies, our strength in fixed income and structured financing and the nimbleness of our approach with our clients and deepening the way in which we engage with clients. So we'll see what comes out.

We will see whether we are at a relative advantage or disadvantage in certain things. But the most important thing is to keep investing in the infrastructure, the people, the products so that -- and the client relationships so that we can manage it through different points in the market cycle through different differences in capital regimes. This has always been a very competitive business, and we expect it to continue to be so. Jonathan -- and then Amit.

It's Jonathan Pierce from Jefferies. If I can take it up a level, if that's okay, a couple of questions. I'm really trying to triangulate the capital generation targets on Slide 71 with the RoTE and the distribution expectations. I mean greater than 230 basis points on circa GBP 400 billion of RWA is obviously getting you to an attributable profit number of over GBP 9 billion. So putting to one side, that's quite a bit ahead of consensus, even if we assume 3% RWA growth, which if the investment bank is pretty flat, is quite a lot. That's only going to take us down to about GBP 8 billion of free capital generation, which is obviously huge in the context of the GBP 15 billion plus over the 3 years. So can I just firstly ask you recognize those numbers? Are these distributions going to be really quite back-end loaded such that when you are stood here in 2 years' time, the next 3 years of distributions are going to be markedly above the greater than 15% that you've talked about today.

Secondly, connected, the RoTE on that 230 basis points plus, if we use consensus TNAV would be closer to 15%, maybe a little above 15%. I just wonder if you can talk to TNAV growth over the next few years. It would be great if you can reference consensus, but maybe some of the things that are harder for us to model like the own credit unwind, the pension surplus, maybe even the cash flow hedge reserve moves to a positive. How should we be thinking about TNAV 2 or 3 years forward, please, particularly versus consensus?

Thanks, Jonathan. I guess both of those are for me. So let me just start with capital. So I'm not going to comment on your math, Jonathan. Where I agree with you is that the organization is generating a lot of capital, and we expect that to continue. And so when we give you a distribution target of greater than 15%, I would concentrate on 2 things within that slide. One is the greater than. And the second is this point that we are making that beyond the investment that we've got in the plan, so beyond the doubling of investment and beyond the level of distributions, there is an element of capital creation here that we are holding for additional investment if we think that is the right thing to do. Now if we don't, then we will, of course, return that to shareholders. That's what our capital hierarchy says. It says first, be well capitalized, then deliver it to shareholders, then invest it to meaningfully improve the returns of the group. So that capital hierarchy remains. We have no desire to hold on to excess levels of capital. So your thought process is as ours is. But as I say, I will leave the math to you. In terms of the sort of -- in terms of the RoTE point, we've given you a RoTE target, which is greater than. So again, I'm not going to comment on the math that you've given me. Last time I looked at it, TNAV was broadly -- our expectations of TNAV and consensus TNAV were broadly similar. I think the difference here is probably in the greater than sign simplistically put.

So maybe one, Amit.

Again, just say, for example, looking at BUK. -- profitability targets, so 28% greater than 20%, similar to 26 greater than 20% despite a mid-40s cost income versus the low 50s, further progression in terms of the income from the hedge. I mean, I guess just wondering why isn't that number, say, greater than 25% or higher, you don't want to show a number like that. So just curious on that. That's the first question.

The second, again, just on the IB, just on IB fees, again, this comes back to the market share point. So I understand the flat wallet assumption going into '28. But again, when I look at the trajectory, I think last time we were thinking that there had been investment in '23 and so forth, which should drive market share gains. We saw gains into '24. I think we went from about 3% to 3.3% -- sorry, into '25 or '24, but that's come back down now to around 3% again. So just wondering what's going to create the reacceleration back to the 3.5%, and what gives the conviction on that piece?

Do you want to take BUK and then I'll come back to the energy. And that's Amit Goel, by the way, from Mediobanca.

You did a good job.

I don't say anything.

So a couple of things just to call out, Amit, just to help you. Firstly, again, I'm going to lean on the greater than. The second thing is that although this is not true for the group for BUK, it is true. We are expecting some impairment normalization within that business. So as we said, it's been running relatively low because we've been recalibrating these impairment models that are consistently overpredicting impairment in the U.K. So we've been running pretty low in BUK, we do expect that to normalize up to around 30 basis points. That's not true of the group. The group is running in totality where I expect it to be. So that's not flattering the group, but I think it is flattering BUK. -- right now. So if you take that plus just lean on the greater than number, then that should hopefully explain Venkat?

Yes. So I'll begin with an answer on fees similar to one I often give on markets. So when we have quarter-by-quarter or annual returns and results in markets, people will always ask, why are you better in this or why are you worse than that? Some of it has to do with where we are relatively -- where our relative strengths and then how do the markets evolve to either give -- play to your relative strengths or not. And you've got to look at it over a long period of time.

On investment banking fees, as I said, we made the investment in bankers. And debt capital markets is relatively strong. It's equity capital markets and M&A, where we need to do more catching up. And leveraged finance is obviously reasonably strong. So when you then look at that, some of it has to do with the pattern of deals in the last year versus the year before. They were larger, more lumpy deals. Sometimes if you're lucky to be in them, you're good. Otherwise, you're not.

So '24 was a helpful year, '25, less helpful. But over the long run, we expect to get that market share simply by having the right bankers and the right product, and we look at this over a longer period. So I will give that kind of answer to you.

Right. Anybody else? Going once. All right. Well, listen, thank you very much. Let me say that over the last couple of years, Anna and I have really appreciated the engagement from all of you and your organizations as we've been on this journey. We appreciate your candid feedback, supportive and encouraging.

We welcome the opportunity to continue these conversations with you. Some of it will be on the road and one-on-ones. And I want to really thank all my colleagues who have helped put this together, Marina, starting with you and your team and the Investor Relations team. So please go easy on them. And then thank you. If you have a minute or 2, there are refreshments outside, and you can linger or you can run back to your computers. I'll leave that to you. Thank you.

Thank you.

Welcome to Barclays Q3 2025 Results Analyst and Investor Conference Call. I will now hand over to C.S. Venkatakrishnan, Group Chief Executive before I hand over to Anna Cross, Group Finance Director.

Good morning, everyone. Thank you for joining Barclays' Third Quarter 2025 Results Call. We are well into the second half of the 3-year plan, which we shared with you in February 2024. I'm very pleased with the momentum and consistency of progress, which we have shown in the last 7 quarters. This quarter, our top line income increased by 11% to GBP 7.2 billion from GBP 6.5 billion in the same quarter last year. Our income growth has allowed our tangible net asset value per share, TNAV to rise to 392p compared to 384p per share in the previous quarter.

And we have delivered a third quarter RoTE of 10.6%, which equates to 12.3% for the year-to-date 2025. We are, therefore, upgrading our 2025 RoTE guidance to greater than 11%, and we are reaffirming our 2026 target of more than 12%. Our returns are supported by a stronger outlook for stable income. We now expect group NII for 2025 to be more than GBP 12.6 billion, up from more than GBP 12.5 billion, and this has been supported by U.K. lending momentum, positive stability and operational progress in the U.S. Consumer Bank.

Further, we are pleased to bring forward a portion of our full year distribution plan with a GBP 500 million share buyback. This is the result of a strong capital generation of a CET1 ratio of 14.1% and disciplined execution of our capital priorities. This buyback will commence as soon as the current one is completed. Looking ahead, we plan to announce buybacks quarterly, reflecting the consistency of our capital generation, and this is subject, as usual, to regulatory and board approvals.

And we reiterate our guidance to return at least GBP 10 billion of capital over our 3-year plan with a progressive increase in the total payout for 2025 versus 2024. Over the past 7 quarters, we have simplified our businesses, rebalanced our footprint and are generating higher returns. Our progress has raised our expectations, and we see how much more potential there is to be realized in Barclays. Hence, alongside our full year results for 2025, Anna and I aim to share with you new targets for Barclays through to 2028.

The group is delivering strong top line momentum, efficiency savings that are earlier than planned and loan losses within our planning range. We are well positioned to achieve the circa 61% cost income target for 2025 despite an additional provision for motor finance, and this reflects strong delivery of planned efficiency savings. And we are managing credit within our range with a 57 basis point loan loss rate, and this is despite a well-publicized single name charge in the investment bank. Our plan is delivering operational improvements across each of our divisions and is driving structurally higher and more consistent returns.

In the third quarter, we achieved our circa GBP 500 million gross efficiency savings target for 2025, and this was 1 quarter earlier than planned. And we remain focused on delivering the circa GBP 2 billion gross efficiency target by the end of 2026, having achieved GBP 1.5 billion so far. All divisions generated a double-digit RoTE again this quarter. This included a 1.3 percentage point year-on-year improvement in the investment bank's RoTE to 10.1% and a 2.6 percentage point improvement in the U.S. consumer bank to 13.5%, reflecting continued operational progress in the business.

And we are driving stronger and more consistent group returns through active and disciplined capital management. We are rebalancing the group by growing RWAs in the three highest returning U.K. businesses, where we continue to see good momentum. We are simplifying the group. And in August, we announced the sale of our stake in Entercard to Swedbank. And we are demonstrating our commitment to shareholder distributions with today's buyback announcement.

In summary, the momentum of our operational progress has increased our confidence and expectations for the group. Improvements in the consistency of our returns also mean that we are more strongly equipped to help clients navigate the still uncertain environment, and to provide a foundation for our plan and targets through to 2028, which we look forward to discussing with you in February.

Anna, over to you now to take us through the third quarter financials.

Thank you, Venkat, and good morning, everyone. Slide 4 summarizes the financial highlights for the third quarter. Before going into detail, I would remind you that the year-on-year performance in Q3 was impacted by a weaker U.S. dollar, which reduced our reported income, costs and impairments. Return on tangible equity was 10.6%, including double-digit returns in all 5 divisions. This was lower than last year, reflecting 8% growth in tangible book value and a GBP 235 million motor finance provision, which also reduced our profit before tax and earnings per share. Notwithstanding this provision, I remain focused as ever on the operational performance of the business, which have continued to strengthen, and the signs of momentum that I described to you last quarter are visible across the businesses in today's results.

Income in Q3 increased 9% year-on-year to GBP 7.2 billion. This was driven by growth in stable income streams, now accounting for 76% of group income from retail and corporate and financing within markets. Group net interest income increased 16% year-on-year to GBP 3.3 billion. We now expect group NII excluding IB and head office to be more than GBP 12.6 billion for FY '25, up from more than GBP 12.5 billion previously, driven by 3 developments.

First, the signs of U.K. lending momentum that I called out last quarter have continued and in place has strengthened. Second, operational progress in the U.S. consumer bank is translating into stronger NII growth of 12% year-on-year this quarter. And third, stable deposits for the group have supported full reinvestment of the structural hedge at yields that exceeded our planning assumption.

We have now locked in GBP 11.8 billion of gross structural hedge income in 2025 and 2026, up from GBP 11.1 billion last quarter. Whilst our plan assumes that we reinvest 90% of maturing hedges at 3.5%, Q3 was more favorable on both yield and notional. We have locked in hedges at a higher rate than planned at circa 3.8%. The stability of hedgeable customer balances throughout 2025 also underpinned two developments.

First, we have fully reinvested in maturing balances for the past 4 quarters with the notional standing at GBP 233 billion in Q3. We now expect the hedge notional to remain broadly stable. And second, our decision this quarter to increase the average hedge duration from 3 years to 3.5 years. This increase reflects the stability of hedgeable balances and further supports the predictability of structural hedge income. As we said previously, the structural hedge is expected to drive multiyear NII growth beyond 2026. For 2027, specifically, the yield on maturing hedges is around 2.1%, which remains significantly below the expected reinvestment rate.

Moving on to costs. The group cost-to-income ratio was 63% in Q3. Total costs increased by around GBP 500 million year-on-year or 14% which included a GBP 235 million motor finance provision within head office. Following the FCA's proposal for an industry-wide redress scheme, our charge reflects the increased likelihood of a greater number of cases being eligible for redress. Specifically, the provision has been calculated using a scenario-based approach with probability weightings being applied to them.

As Venkat mentioned, we have already delivered circa GBP 500 million of gross efficiency savings in 2025, showing further progress towards the circa GBP 2 billion target by the end of 2026. Around half of the increase in investment costs related to the addition of Tesco Bank. The remainder relates to structural cost actions in the quarter with around GBP 190 million recognized so far this year. And looking ahead, we expect structural cost actions to be around the top of the GBP 200 million to GBP 300 million normal annual range during 2025. Inclusive of the motor finance provision, we remain well positioned to deliver a circa 61% cost-to-income ratio in 2025, in line with guidance and the high 50s target in 2026.

Turning now to impairment. The Q3 group impairment charge of GBP 632 million equated to a loan loss rate of 57 basis points. This includes a lower-than-expected day 1 charge following the acquisition of General Motors card balances due to lower-than-forecast delinquency rates on the book. Excluding this effect, the group loan loss rate was 52 basis points. This included the circa GBP 110 million single name charge in the investment bank. More broadly, the U.K. and U.S. credit picture remains benign with low and stable delinquencies in our consumer books and wholesale loan loss rates below our through-the-cycle expectations. And we continue to expect a group loan loss rate within the through-the-cycle guidance of 50 to 60 basis points for FY 2025.

Focusing on the U.S. consumer bank, 90-day delinquencies are stable with a seasonal 10 basis point increase in 30-day delinquencies in the quarter to 2.9%. Consumer behavior remains resilient as can be seen on Slide 39 in the appendix. Excluding the day 1 charge for GM, the loan loss rate of 436 basis points was broadly stable year-on-year. As a reminder, Q4 impairments tend to be seasonally higher, and we continue to expect a post-acquisition stage migration charge for the GM portfolio of circa GBP 50 million for the next few quarters.

Turning now to our U.K. lending momentum. We have now shown the slide for a few quarters, and I'm pleased to say that momentum continues. Let me call out some highlights rather than talking through each area in detail. In mortgages, we have grown balances for the past 5 quarters, and Q3 net lending of GBP 3.1 billion was higher than in any quarter since 2021.

We are achieving this in 2 ways. First, by expanding the product range with full utilization of the Kensington brand, increasing the mix of higher LTV lending to levels more in line with the market. Second, we are improving processes. This year, we launched a new platform to more than 26,000 mortgage brokers, which has reduced application processing times from around 45 to around 15 minutes on average. This has significantly improved broker net promoter scores and have increased the capacity and efficiency of the mortgage business.

In the U.K. Corporate Bank, lending grew for the fourth consecutive quarter and by 17% year-on-year as we continue to increase market share. More than half of this growth came from new clients acquired since 2024, a key strategic focus for the business. And we continue to simplify the borrowing process for new and existing clients. In both cases, we have further to go, supporting our plan to deploy GBP 30 billion of U.K. business growth RWAs by 2026.

Turning to Barclays U.K. in more detail. You can see financial highlights on Slide 13, but I will talk to Slide 14. RoTE was 21.8% in the quarter, NII of GBP 1.96 billion increased 18% year-on-year and 6% quarter-on-quarter with NIM up 13 basis points versus Q2. Around half of this increase came from the reinvestment of the structural hedge. Consistent with the guidance we gave you, product margin increased NII by GBP 50 million in the quarter. A large part of this move was due to the phasing of historic swaps income, which, as we called out last quarter, suppressed product margin in half 1.

We expect a broadly neutral product margin contribution in Q4 and remain confident in our guidance for NII to exceed GBP 7.6 billion in 2025. Non-NII of GBP 292 million rose versus Q2, reflecting seasonally higher holiday spend and some one-off effects, and we would expect this to be lower in Q4. Costs were stable versus Q2, but increased by 19% year-on-year, mainly reflecting Tesco Bank and structural cost actions in Q3. As we told you previously, we expect the cost-to-income ratio for Barclays U.K. to increase this year from 52% in 2024 before falling to circa 50% in 2026.

Moving on to the Barclays U.K. balance sheet. Deposits remained broadly stable versus Q2, though competition for higher-rate deposits continued in Q3 and is likely to persist. Lending grew for the fifth consecutive quarter and by 7% year-on-year, driven by mortgages. As a broader market trend, mortgage refinance activity remained elevated, and we expect this to continue into the middle of next year as 5-year fixed rate mortgages written during the stamp duty holiday in 2020 and 2021 mature. Our retention experience remained strong in the quarter and the capability improvements that I called out earlier are supporting lending momentum.

Moving to the U.K. Corporate Bank on Slide 17. Q3 RoTE was 22.8%. Income growth of 17% exceeded cost growth of 5%, leading to an improved cost-to-income ratio of 45%. NII growth of 24% reflected stronger volumes. Lending increased 17% year-on-year, supporting a 70 basis point increase in market share to 9.3%. Deposit market share of more than 20% also increased and balances grew by 5% year-on-year. Together, this growth supported a 3 percentage point increase in the loan-to-deposit ratio to 33%.

Turning now to Private Bank and Wealth Management. Q3 RoTE was 26.4%, client assets and liabilities grew 10% year-on-year and assets under management grew by 12%, supported by GBP 0.7 billion of net new assets under management in the quarter. Strong client engagement supported deposit growth versus last quarter and last year with a continued change in mix towards lower-margin products as clients rebalance assets. Income grew by 3% year-on-year, though fell modestly versus Q2 as a result of this mix effect, and we expect Q4 income to be broadly stable versus Q3. Costs increased by 10% year-on-year and the cost-to-income ratio rose to 73%, reflecting investment in the business. We expect to continue this investment to support growth and the high 60s cost-to-income ratio in 2026.

Turning now to the Investment Bank. Before getting into the detail of the quarter, let me remind you that our focus in the IB is to drive consistently higher and more stable returns. Q3 RoTE of 10.1% increased 1.3% year-on-year despite the single name impairment charge and year-to-date RoTE was 12.9%. This performance reflects operational improvements in the business, which are evident in the quarter.

Stable income streams, financing in Markets and International Corporate Bank in Investment Banking have accounted for nearly half of the IB's income this quarter. Income over average RWAs has improved in every one of the last 6 quarters as a year-on-year matter and by 60 basis points in Q3. We also remain disciplined on costs with a sixth consecutive quarter of positive jaws. These improvements support the Investment Bank's income and returns in a wide range of environments.

Turning now to look at income by business on Slide 22. Using the U.S. dollar figures, markets income was up 6% year-on-year, whilst investment banking fee income was up 11%. Let me highlight some areas of strength and some areas where we need to do better. First, on strength. Financing income has now grown year-on-year for 5 consecutive quarters, including by 21% in Q3. In Prime, we ranked joint fifth globally and client balances have grown circa 30% year-on-year.

In the International Corporate Bank, stable income growth has been supported by the rollout of the treasury coverage model now to 1,500 top clients versus 800 at the end of 2024. This has also helped to drive circa 20% year-to-date growth in U.S. deposits and strong growth in corporate FX and risk solutions revenues in the Investment Bank. And we have made good progress in M&A with sponsors, a key focus area where our year-to-date market share increased by circa 140 basis points year-on-year.

In other areas, we need to do better. This includes corporate M&A, where we were less able to capture stronger activity in the quarter and in equity derivatives, where our performance was impacted by lower volatility. We also have more to do to sustainably increase market share in ECM, where we did not participate in some larger deals and others were pushed into Q4.

Turning now to the U.S. Consumer Bank. Before I get into the numbers, let me first cover operational performance of USCB. Starting with volumes, and net receivables grew by 10% year-on-year, of which around half related to GM coming on board at the end of August. As a reminder, we expect this acquisition to enhance RoTE from Q4. NIM continued to progress towards the greater than 12% target by 2026, rising circa 110 basis points year-on-year to 11.5%, driven by 3 actions.

First, repricing that we undertook in 2024 continued to support margins as customers repay and rebuild balances on new terms and conditions. This accounted for around half of the year-on-year increase in NIM in Q3. Second, we continue to optimize the lending book mix. Following the acquisition of GM card balances at the end of August, retail partners account for 19% of end net receivables versus the circa 20% target by 2026, up from circa 15% at the start of the plan. Third, we continue to see strong core retail deposit growth, though as expected, the increase in wholesale funding to support GM temporarily reduced core deposit funding to 68% of the total.

These improvements in the income profile were complemented by ongoing progress to improve efficiency, supporting a 43% cost-income ratio in the quarter, on track for the mid-40s target. All of these actions have contributed to the strong financial performance in the quarter, which you can see on the next slide.

RoTE was 13.5%, up 2.6% year-on-year and 9.4% year-to-date. Using the U.S. dollar figures, income was up 21% year-on-year and costs up 6%. Stronger noninterest income accounted for around half of the income growth year-on-year, reflecting higher interchange and account fees. NII, which grew by 14% year-on-year and 12% quarter-on-quarter, was supported by stronger volumes and margins. The broad range of factors supporting higher returns in the U.S. Consumer Bank reflect the operational progress that I outlined, underpinning our confidence in the sustainability of this progress. We ended the quarter with a CET1 capital ratio of 14.1%. This included circa 40 basis points of capital generation from profits.

Given the consistency of our capital generation, a CET1 ratio of 14.1% and disciplined execution of our capital priorities, we have announced a GBP 500 million share buyback. This brings forward our full year distribution plans rather than increasing total distributions for the year. The CET1 ratio pro forma for this buyback is 13.9%. RWAs increased GBP 4.3 billion quarter-on-quarter, driven largely by FX and the acquisition of the GM portfolio. Excluding FX, Investment Bank RWAs remained broadly stable and accounted for 56% of the group RWAs.

As usual, a word on our overall liquidity and funding on Slide 28. We have strong and diverse funding, including a 74% LDR and an NSFR of 135%, and we are highly liquid across currencies with an LCR of 175%. These measures reflect purposeful and prudent management of our balance sheet, delivering resilience and capacity to support customers in a range of economic environments. TNAV per share increased 8p in the quarter and 41p year-on-year to 392p. Attributable profit added 10p per share during Q3, partially offset by dividends paid in the quarter and movements in the cash flow hedge reserve.

The cash flow hedge reserve is expected to unwind by the end of 2026, adding to TNAV per share as it has in recent quarters. The more significant effects of earnings growth and buybacks give us confidence that TNAV will continue to grow consistently as it has done for the last 9 consecutive quarters. So to summarize, we are pleased with the group's strong performance in Q3. This positions us well to deliver on all our 2025 guidance and 2026 targets and provides a strong foundation to build from as we look to update the market on the second leg of our transformation journey.

Over to you, Venkat, for concluding remarks.

We are 7 quarters into our 12-quarter plan and remain on track to deliver our goals. We are working hard to deliver sustainable operational and financial improvement across our businesses. And this, in turn, will generate higher group returns and drive shareholder distributions.

I will now open for questions and answers. As ever, please limit yourself to 2 questions per person so we can get around as many of you as possible and please also introduce yourself as you ask your questions.

[Operator Instructions]

Our first question comes from Guy Stebbings from BNP Paribas.

The first one is on the U.S. consumer top line. Clearly, very strong, up sort of 20% year-over-year, both noninterest income and the NIM moving up to 11.5%. Just help us to understand if there's anything particularly lumpy in there? So I guess, first is to confirm that we should be thinking about growth of that 11.5% NIM base given the sort of ongoing lending mix actions you talked to and growth in retail deposit base? And then within that GBP 250 million of noninterest income in Q3, anything lumpy in there you would point to tempt us away from annualizing north of GBP 800 million before thinking about things like gains on sales of portfolios next year?

And then the second question was just on U.K. mortgages. From a volume perspective, very strong, both net and gross lending, I think nearly GBP 10 billion in gross lending is certainly above typical run rate. I'm just interested if that's the level you think you will continue to write out. And then from a sort of competitive perspective, what you're seeing in the market? I know the actions you're taking and the Kensington offers quite a bit of insulation, but are you seeing any competitive pressures on new lending spreads when you look at like-for-like lending?

Thanks, Guy. I'll take both of those, and thanks for opening the call for us. Just on the U.S. consumer top line, I think what you're seeing coming together now is a real combination of all of the operational actions that we've been undertaking over the last few quarters, and you can see that on a new slide on Slide 24. Because it's drawn from those operational actions, we do have confidence in its sustainability. Really what's driving the NIM is the things that we've talked about before.

So it's the repricing, which remember, it takes some time to work its way through into the NIM because customers need to draw down on those new terms and conditions. It's also the increase in the level of retail deposits, and retail deposits are about 50 to 60 basis points cheaper than the other sources of funding we've had previously. And then thirdly, there is this increasing proportion of retail balances, which are higher NIM.

So I expect over the next couple of quarters, Q4 and Q1 to be broadly at the level of NIM that we're currently running at, around 11.5%. I'm not going to guide you to Q2 and beyond because, obviously, once we exit the AA portfolio, that NIM is going to jump up again. So I will guide you to that a little nearer the time.

In terms of noninterest income, there's a couple of things going on in there. The first is obviously the increase in volume that we're seeing, not just from GM, but also the organic growth in this business. So if you go back to the equivalent quarter, just before the start of the plan, we've grown 13% since then. So you're seeing that coming through in non-NII, and you're also seeing some improvement in partner sharing agreements just reflected in that number. So we do have confidence in the momentum in the income line. I'd just remind you that this is a seasonal business and you get that seasonality in NII because of balances, but you also get it in noninterest income. But yes, we're pleased with that progress.

In U.K. mortgages, the U.K. mortgage market is robust, and we see that across the piece. We see it in house purchase. First-time buyers are up 11% year-on-year. We're seeing strong levels of refinancing. And the margins in Barclays, if you like, in the more vanilla book have been broadly stable over the last few quarters. Obviously, we're seeing a margin benefit coming through from Kensington, which is 3 to 4x higher. And really, what you're seeing here is our capabilities reaching the marketplace. And by that, what I mean is both the product breadth because we know what Kensington in play, but also the operational capabilities because we launched a new broker platform, which is working extremely well.

The only thing I'd call out for you is, we're about to enter a period market-wide, it's not a Barclays thing, where we've got coming to maturity, the 5-year business that was written during the stamp duty holiday in FY '20 and FY '21. That's at relatively wide margins. So you're going to see a little bit of sort of churn compression, if you like, come through on that. But of course, we captured that in the guidance that we've already given you around NII progression for the U.K. Thank you. Next question, please.

Our next question comes from Jason Napier from UBS.

The first one, just looking at competitive conditions in U.S. investment banking. We've had some of the peers talk about potentially very significant levels of additional capital that's available for deployment following some of the deregulation and stress test changes. And prime appears to be one of the places that they may be looking to allocate additional capacity. So given it's a focus for the bank, could you just talk about whether you think you have additional capital to deploy, given the changes in things like stress tests and what you're seeing on product margins and that sort of thing?

And then secondly, on the nonbank financial intermediary space, thank you for the additional disclosures, those are really welcome, and it's good to see the impairment charge at a group level below consensus today.

Venkat, I wonder whether you could talk a little bit about risks in that industry, how mature the exposures are, whether there are any vintages we should be bothered about? We could observe that the cases we've seen so far all involve fraud, but we have seen very strong growth in the industry, writ large. And so I wonder with your risk management hat on, whether you could just talk about whether this is an industry that is yet to grind into fully mature loss run rates and how you think about that sort of thing?

Thank you, Jason. Good questions. On the first one, on capital regulation or disparity -- potential disparity in capital regulation between Europe, the U.K. and the U.S., look, it is, I think, an important factor in the industry. We haven't seen ultimately what will be the changes in the U.S. and how much the U.K., which is the important jurisdiction for us, as a home regulator, makes itself consistent or not. I think what I would point out on things like prime is, A, we've got a good and strong market share. We work with a few important and big clients carefully. It is as much a balance sheet business as it is a capital business.

And so we think we've got the wherewithal, and given our current market position given our product capability, given our client penetration, we've got the wherewithal to compete effectively and continue to compete effectively. Of course, it's all subject to capital rules. We'll have to see where they are but I'm pretty confident in the strength of that business and how we will adapt overall in the investment bank because ultimately, it's about that.

Coming back to private credit and NBFI, so here's what I will say. First of all, I view credit as credit as credit, right? There's a distinction about where it's originated from and private credit, generally, we at least think of that as the kind of credit that's originated outside of banks and outside of the public debt market. But I think of lending as lending. And through the cycle, you've got to be careful about all the aspects of lending, client selection, sector concentrations, name concentrations, terms and continuous monitoring, qualifying them initially and monitoring it over life over the time period. So that's important and that you've got to do through the period.

Look, I'm obviously disappointed that we had Tricolor. The fact that it was for is no excuse. But we've looked at what lessons we can learn from that and applied it across our portfolio, and I'll talk a little about that. We did not have first brands. We were approached a couple of times, and we said no. And we said no because our credit officers felt that there was not enough data or information to support the financial projections they may. That's how credit selection is supposed to work.

Now at this point in time, and you talk a little about vintages, less to me a question about vintage, but a question -- two questions. One is, are there circumstances either because of inflation, either because of tariffs or changes in general economic conditions that put stress on credit performance? So do companies find themselves stretched?

Now fraud can be isolated bad actors or it could be economic conditions that increase the propensity towards bad acting, if you like. And then if you worry about that, you've got to consider very carefully the independence and strength of the financial controls employed within the companies. As you can imagine, we consider all of these things over time. But I think what these two instances show is that we will likely be monitoring our portfolios more carefully, particularly understanding the impact of changed economic conditions on companies and looking closely at the strength and independence of financial controls. Hope that answers your question.

Your next question comes from Chris Cant from Autonomous.

I just wanted to follow up on the U.S. consumer business and then another one around sort of risks that investors are worrying about of late. So on U.S. consumer, we've had this target for a while for the business to get to a greater than 12% RoTE for next year. I appreciate that quite a few things have changed over the last 18 months, 2 years since you gave that guidance in terms of the AA book, now expecting to move off and so on. Given where we've got to with 3Q in terms of the returns, could you give us a bit more color as to what return you expect that segment to be delivering in '26? Obviously, greater than 12% is open-ended. That would be helpful, I think, to sort of realign consensus expectations on that division a little bit.

And then the other topic I wanted to throw out there beyond private credit was stablecoins. There's been some nervousness over the summer months from some investors around what threat stablecoin issuance creates for the banking system, I guess, more so on the other side of the pond, given that's where most of these innovations are being deployed first. So I just wanted to invite you to comment, Venkat, in terms of how you think that potentially shapes up for the business longer term?

Thanks, Chris. I'll start on U.S. consumer and then I'll hand to Venkat. In terms of U.S. consumer, it's exactly where we expected it would be, and we continue to target that RoTE of greater than 12%. Clearly, 2026 statutory rate will be impacted by the gain on sale of AA. It's a bit too early to guide you on that. Chris, we will do nearer the time. But think on an underlying basis that we are aiming to achieve the kind of progress that we set out for you in the targets that we set. Beyond '26, we remain committed to pushing this business further and you can see that with the momentum that's coming through now, and we'd expect to continue around income, around operational costs also. So we've got many levers that we can continue to pull. And we really think this should be a mid-teens business. Venkat?

Yes. Look, stablecoin, it's a broad and fascinating subject, Chris. So thanks for the question. I'll try to confine my answer though. So there are a couple of dimensions of it. One is, what does it do to deposits? Second is, how much does it represent an alternative form of payment? And third is, is it an alternative form of payment on an alternative network? I think the deposit question for the big banks is something which the banks will have to consider along with our regulators.

Because the real question is, is this something that sits outside the deposit system or is it brought within the deposit system? And it's a very critical question to answer because it relates to the transmission of monetary policy. The second thing is, as a store of value and the form of deposit that it takes. The initial use cases seem to be more promising outside of the developing countries in developed -- in developing countries, so where people who might use it as a dollar substitute for their local currency. Less clear case within, say, the U.S. or the U.K. or even Europe.

The third thing is even if you accepted the first two, is there then a separate network upon which this can travel? I can tell you what Barclays' approach is. We think any of these are possibilities. It's a very promising and broad-reaching technology. Will it ultimately work? I don't know, but we've got to investigate it and be part of it. So you might have seen announcements that we are part of consortiums with other bank -- consortia with other banks. And obviously, no one bank can act alone. We are studying the technology. And I think it will take some time to know clearly and with some confidence what exactly the use cases could be and how valuable they are. But it's important enough that we've got to study it carefully.

The next question comes from Rob Noble from Deutsche Bank.

Just on private credit again. Could you help us with the economics of how that business works? So what spread are you making on the business, the risk weights? I presume it's been growing very quickly. Are you worried that if the Bank of England -- I mean, regardless of how confident, low risk your particular book is, are you worried that if the Bank of England is looking into it, it's going to deter you from further growth in that area? And then in Kensington in the U.K., I see you've doubled the book, so that makes around GBP 4 billion now, if I'm not mistaken. Do you have any designs to go into any other areas of specialized lending in the U.K.?

Right. Let me take the first one, Rob, and then Anna will cover Kensington. So what I would say about -- we have a disclosure slide, Slide 43 in our pack on private credit. What I would say is that the exposure is growing in a sort of relatively stable manner, right, and has been for us for a while. I'm not going to get into RWAs and spreads. I think we've been very clear about the strong credit controls we put on this and the types of people we work with. To reiterate, we work with the most experienced, well-regarded, top-notch, top players in the industry. We provide financing generally against both pools of loans of credits, which they originate on a secured basis, those portfolios are diversified.

We have limits on borrower concentration and sector concentrations. We're skewed towards large-cap corporates. We require lower relative ease, so that we can get better first-loss protection. And we've got some statistics there, and we've retained revaluation rights, which means mark-to-market rights on the portfolio, and enforce the maintenance of LTVs, and collateral additions require our individual approval. So it's a risk management process and practice. I think it's important that regulators examine all aspects of the financial system. We welcome the review of the Bank of England -- by the Bank of England. And we think, as I said, that we've got strong risk management practices. So we're comfortable and confident in that.

Thanks, Venkat. Rob, on your question on Kensington, the balances are around GBP 4 billion in Kensington. Just to sort of highlight how we think about this business. I mean, it's no difference actually in risk management terms to the way Venkat has just described private credit or indeed any kind of credit. So we're very focused on the choice of customers. So Kensington has 30 years of experience of really focused client and product level and affordability assessment.

And then once the balances are on our balance sheet, then we do manage them actively, and that was one of the capabilities that we drew from Kensington. So you might have noticed that in Q3, we actually did a Stage 3 securitization from there. So it is quite a sophisticated risk capability, and it is contributing not only to breadth of mortgage offering, but also to the blended margin. But thank you for the question. Next question, please.

Our next question comes from Nicolas Payen from Kepler Chevreux.

I have two, please. The first one would be on your U.K. RWA deployment. I think you have deployed circa GBP 1 billion of RWA during Q3. And it seems to me that the run rate was actually closer to GBP 2 billion per quarter, so especially in the context where you had a good lending performance in Q3. So I just wanted to discuss how we should think about it and whether or not we should have a catch-up in U.K. RWA deployment a bit later?

And then the second one is just a follow-up on the mortgage headwinds coming from the maturity of the mortgage underwritten during COVID . So what kind of headwinds are you expecting and for how long should we expect this?

Thank you very much. So we've got a GBP 30 billion RWA target. We deployed GBP 18 billion so far, GBP 11 billion of that is organic. It's interesting because when we set out these targets, the RWA growth in the U.K. is really a shorthand for our desire to lend into the U.K. And actually, what you find is that in some quarters, RWAs grow faster than lending, and that's what we saw earlier in the year. And actually, in this quarter, lending grew faster than RWAs. It's actually the lending that we're really focused on internally.

It's a lending, not the RWAs that we generate income from, and we're really pleased with the progress. It's our highest quarter of net lending in mortgages since 2021. And we've now got 4 consecutive quarters of lending in our corporate book. So we're happy, we're happy with the progress, nothing really to call out. It's just timing differences between RWAs and loans.

In terms of mortgage headwinds, look, our churn effects on our book have been broadly stable, neutral for some time. All we're calling out here is there will be a period of pressure. Actually, overall, we expect the product margin impact on the U.K., as a whole, taking all products into account, will be broadly neutral into Q4. So expect that number to be broadly zero in the NIM walk.

But it's really towards the end of '20 and the first quarter of 2021, there was a stamp duty holiday in the U.K. and a lot of business was written, that's going to mature. It will compress margins a little as that business flips over onto front book. I'm not going to call out a particular spread, that will be different by lender and different by products. But it's just something for you to consider. And as I say, we've already taken it into account in the guidance that we've given you. But thank you for the questions. Next question, please?

Our next question comes from Jonathan Pierce from Jefferies.

I've got 2 questions actually. The first is on what we're going to get full year with regard to these 2027, '28 targets? I'm not after the numbers, of course, unless you want to give them to us, but the sort of detail. I'm assuming it's probably not another 100 slide presentation like we got last February, but I'm assuming we will get RoTE targets for '28 distribution amounts and mix, maybe even equity tier 1 targets, these sorts of things. So just to give us an idea of what we should be expecting qualitatively ahead of February would be helpful.

Secondly, maybe I can try and preempt one little piece of that, though, which is on the structural hedge. The weighted average life has moved out now 3.5 years. When we think about the size of maturities coming through in '27 and '28, should we be thinking, therefore, [Technical Difficulty] we've been getting recently to GBP 35 billion a year? Or will it hold up at GBP 50 billion for a little longer? And maybe I can invite you to give us the maturity yield in 2028 itself, if that's possible?

Okay. Jonathan, I will take both of those. So we have said that we will give you updated targets in FY '25. So in February, we've also said that Venkat and I will do that together. So you should hopefully read from that, that it won't be quite such a long update as it was last time. But we will be focused on '26, '27, '28. So what should you expect? We were really clear at the time that greater than 12% rate was not an endpoint, and that was true of every target that we gave you. That remains true.

So you should expect us to come back with details on how we expect to push rates higher not just as a group, but specifically in some business areas also. And you know, there's a pattern of delivery that you should be seeing that you should continue to expect, which is higher levels of revenue, but particularly focused on the stability and predictability of that revenue. Secondly, that we'll continue to push gross efficiency savings to create capacity and cost for investments. And thirdly, that we will continue to be very disciplined in capital. So more on the February 10th, but that's the trailer, if you like.

In terms of the structural hedge, just back to this point around predictability, the reason that we extended the duration is because we see greater stability in deposits. So it's a response to that. What that will naturally do is slightly lower the level of maturities as you go out a little bit further. We haven't yet given a maturing yield for '28. We will do that in February. We have given you 2027. That is 2.1%. So you've got 1.5% in '25 and '26, then 2.1% in '27. And really, what's happening here is because we are extending that, clearly, we have a mix of maturities within that maturing yield or a mix of tenors within that maturing yield. And there is a portion of 7-year in there that is really holding down that maturing yield as we go a little bit further out. So hopefully, that gives you some things to work on, and we'll come back to it in February.

Our next question comes from Amit Goel from Mediobanca.

So 2 follow-up questions actually. One, just coming back in terms of the strategy update or new targets for '28 that we get with full year. I'm just kind of curious how you're going through that process? And are you thinking about kind of things like revising capital allocation to the businesses, things like that? Or is it more about efficiency and driving more out of the business with the kind of path already set?

And then secondly, just on the U.S. CB. I think your remarks earlier that for the next couple of quarters, so Q4, Q1, you'd anticipate kind of a flattish NIM on what we've just seen the 11.5%. I'm just kind of curious, given the factors that you outlined before in terms of improvement, why that would be flat and why that wouldn't continue to show a bit of growth in the coming periods?

Amit, good questions. I'll take the first one and Anna will take the second one. So you should see what you -- the way we're thinking about the strategy is actually what you said in the second half of your statement, which is happy with the business footprint, intensification of the aspects, which Anna just referred to, top line revenue, efficiency, depth and breadth of product reach. And so basically getting more out of each of the businesses and getting more out of the collective. So see a continuation and an intensification of what we've done.

And Amit, on your second question, I mean, I wouldn't really add anything. There is a degree of seasonality to the business. But no, I mean NIM, we do see as many of those effects having flowed through largely already. Typically, we see slightly lower levels of retail funding as we go into the full year just because balances grow, and we tend to use a bit more sort of the brokered deposits. So that does have a little bit of an impact on NIM. But nothing really to call out. Just assume it's broadly flat really over the next couple of quarters. And as I say, it's going to pop up again from Q2 onwards, but we'll tell you a little bit more about that.

Our next question comes from Perlie Mong from Bank of America.

Just a couple of questions. First on distribution. So I think it's very welcome to see a buyback this quarter and moving to quarterly distribution. Can you just tell us how you thought about it, why did you decide to go to quarterly cadence? And in terms of going forward, is there like a sort of monthly rolling number that you are thinking about? And within the wider distribution context, now that it's closer to price-to-book, are you thinking about maybe doing more distribution? So that's number one.

Number two is on cost. You highlighted that you've achieved your efficiency savings one quarter earlier than expected. But also for next quarter, you would expect to run towards the top end of the GBP 200 million to GBP 300 million cost to achieve, or CTAs, if you like. So is that something that you would expect to run at that level in 2026? And as part of the strategy update, I think last time we did it, I think there was maybe GBP 900 million or GBP 1 billion cost to achieve upfront as well. Is that something that you are thinking about as well?

Thanks, Perlie. Let me take both of those. So the buyback decision, really what that reflects is our confidence in the consistency of generation of capital. And it's just a clear articulation of the capital priorities that we gave you at the outset of the plan which were, number one, you should expect us to be well capitalized as a regulatory matter; number two, returning capital to shareholders; and number three, investing in the businesses.

So as we reflected really over the last few quarters, actually, and we've seen the strength and quality and resilience of that capital generation, this is something that we've been thinking about. So what we've done is, we've accelerated a portion that we would otherwise have paid at the full year, and that's really our desire to put it in the hands of shareholders. So nothing more significant than that.

In terms of the go-forward plan, in terms of balance, cadence, et cetera, we will cover that with you in February when we give you those target updates. In terms of costs, so our primary objective here is to continue to drive efficiencies. That's what we're doing. And our structural cost actions play a really key role in driving that forward. But there's no real change here at all.

And in fact, given the delivery of that sort of gross efficiencies a quarter early, and given we've got such momentum in our NII, had it not been for motor finance, I would have been expecting today to upgrade the cost-to-income ratio to around 60. As it is, given that progress we've been able to absorb motor finance and reiterate our 61% guidance to you. I still expect next year to be in the high 50s.

Typically, in any year, we spend between GBP 200 million and GBP 300 million. That's what we're guiding you to this year. We're just calling out, it might be towards the top end of that. But again, that is all encapsulated within the guidance that we've given you of circa 61 for this year. So there's no real change to anything that we are seeing in terms of costs. But thank you for the question. Perhaps we could go to the next question, please?

Our next question comes from Alvaro Serrano from Morgan Stanley.

I guess there are 2 follow-ups. I apologize for another one on private credit. As you look at what went wrong in Tricolor, and you've reviewed the rest of the book, are you satisfied that you've got the collateral is -- the collateral integrity is there? And can you reassure us? And when we think about this business going forward, obviously, financing has been a source of growth for a while. I think, Venkat, you may have alluded to this, but should we expect that growth to slow down from that 20% run rate that you've been doing for a while?

And the second question, I guess, it's also a follow-up on U.S. cards. To get to that 15% RoTE, Anna, that you've often quoted, do you think you've got the right scale? I'm thinking, obviously, in the post-American Airlines world? Or would you expect more JVs and more contract wins? And how is the pipeline looking on any further wins? Because I haven't seen sort of chunky ones. Obviously, you've had GM, but that's been announced a while ago. So maybe some comments on the pipeline on wins on there.

Alvaro, let me start with the first one. So about the review that we took, it's along the 3 dimensions, which I said to you. One is, our company is being financially stretched. Second, the thing -- the second part is, strength of financial controls in the company and independence of financial controls. I also want to be very clear, there's sort of broad financing, there's private credit. The slide we've given you is on private credit. And on our pattern of growth, it's been relatively stable, growing a little, but growing slowly.

And I would always say on these things on lending, it is a case-by-case decision. We will look at loans, and we will decide. We tend not to grow these books that aggressively. And as you also know, I think that we tend to employ, over the cycle, risk transfer transactions, and we've been doing so for a decade. So that's been our broad approach to both risk management, to credit risk management and to the overall portfolio.

And then the second part of your question on private credit was basically for Anna. So I'll pass it over.

Yes, sure. So your question references the mid-teens sort of aspiration we have for this business. I mean a large part of that is in our hands now, and you can see the progress that we're making around efficiency. We targeted mid 40s cost-to-income ratio, we're already at 43. So expect us to push on. You can see the progress in the NIM. So all of those things are within our control.

We do want to grow the book. We will never do so at the expense of RoTE, and we have seen opportunities to do organically, as I said, and inorganically. So for example through GM. As you can imagine, we look at portfolios all the time, and we assess those as to whether or not they are RoTE generative, both for USCB and in the context of the group.

The nature of this business is that it is always a balance of those two things. It's always a balance of leaning into the partners that we've already got and expanding those, which we've got good experience of but also acquiring new capabilities and partners as we go.

So I'll hand to Venkat.

Sorry, there was one part I didn't answer, Alvaro. You asked me about the review we did and what we found. So we reviewed it in the way I just said, looking at companies and looking at the controls. We're satisfied with what we've seen so far in our portfolio, what we've seen in the review we've conducted. Obviously, you're going to have to remain vigilant, which we would have done anyway, but we will be vigilant going forward.

Our next question comes from Chris Hallam from Goldman Sachs.

A couple of just follow-ups left over. Venkat back on NBFI, sorry, Venkat, you mentioned the importance of initial qualification and continuous monitoring. And I guess, in light of recent events, that review that you're running through in that book and just triple checking everything, how far through that review are you? Or have you fully completed that review? Maybe I missed that in your earlier comments? Sorry, if I did.

And then second, on the IB, and it's a bit of a follow-up to Jason's question earlier on the call. I guess this is a pretty difficult regulatory backdrop against which to set a 3-year plan. You mentioned that we're yet to see what the U.S. will do and the degree of alignment that U.K. will settle at. So should we think that the 2020 IB business plan is going to be sort of caveated that it's reg dependent? Or do you think that the balance of outcomes on dereg and your earlier point on capital versus balance sheet headroom means that you have and will sustain a plan for all seasons?

Thanks, Chris. I'll let Anna take the second question. On the first one, the review is completed. As I said, I'm satisfied with what we saw, but we're going to have to continue to be vigilant and that's always been the case.

Chris, just on your second question, I mean, you're right. There is a degree of regulatory uncertainty out there. And clearly, what we would want to have is consistency of regulation, both in its approach and its implementation date across all 3 jurisdictions, so Europe, U.K. and U.S. So that is difficult from a timing perspective in terms of planning. But sort of more holistically than that, the plans and the strategy that we have for the investment bank.

Venkat referred to it before as running our own race. And we remain extremely focused on doing that, obviously mindful of the competitive environment also. But our objective here is and will remain to drive higher returns in the investment bank, more consistent returns, and that's really about focusing on the stability of income, both stable sources of income, like the international corporate bank, like financing, but also stabilizing the intermediation and fees parts of the business.

There's a really important piece here around cost and efficiency and technology-led efficiency. And so what you've seen over the last few quarters, we've had 6 quarters of consecutive positive jaws in this business. And then the third piece is just this continued driving capital efficiency. We think we've got a ways to go. You've seen, again, 6 consecutive quarters of year-over-year improvement, but there's more there for us to do.

So I think it's really important that we focus on the things that we can control and then navigate the regulatory environment as it emerges, and we are well used to doing that. We've seen divergences before, we continue to see them, and we'll deal with it when we have the facts in front of us. Thank you for the questions. Next question, please?

Our next question comes from Andrew Coombs from Citi Group.

Two questions, please. Firstly, if I could just follow up on the Investment Bank. Obviously, you had a very strong first half of the year. Q3 is slightly lagged the growth seen at the U.S. peers. Can you just explain how much you think that's just a mix effect? Is it a mix effect by business segment, by region, across equities and across primary? Or are there any gaps that you're still looking to infill there?

And then the second question, broader question on the U.K. You've obviously seen strong mortgage and corporate loan growth in Q3. But can you perhaps touch upon customer behavior and activity going into the November budget?

Andy, thanks. Let me begin with the IB, and then I will pass over to Anna on the U.K. As I've told you, I take a long view of this. We are running our own race. We set out targets. We put in an RWA target for the Investment Bank, which was to keep it flat and we've kept flat. We also instituted our discipline, which Anna just spoke about. And then we had both revenue targets, cost efficiency targets and overall return targets, profitability targets, all of which we've been meeting.

We also put in within that certain areas of focus within markets and banking. In markets, it was European risk, it was securitized products. It was equities, particularly equity derivatives. In banking, it was certain sectors, health care and tech, and then it was M&A and ECM. Now over this long period, we have shown strong progress in all these dimensions.

Even if you look at something like equity derivatives, we've been growing a couple of percent over this year, less than what the U.S. peers had this quarter. Quarter-to-quarter, there will be variations. Some of that variation is about the amount of capital and balance sheet, some of the competitors allocate over time. Some of that variation is geographical concentration. So Asia has been strong. We've always been very clear that we have a solid Asian presence, but it's not as deep and broad as others have. There are times when commodities plays a role. There's times when credit plays a role, and that's generally good for us.

So I would view what you've seen in this quarter's results as that kind of normal Q-on-Q variation, I don't think when I look at the plans of the Investment Bank, what we've had, what we intend to do, that there are sort of gaps or holes we need to fill. I think we continue to build on technology, continue to build on product sophistication, continue to build on client reach, and we will show the returns that we've set out to and we've displayed over the last 7 quarters.

Andy, here's how I think about the U.K. landscape. So I think about it, first, on how our consumer is spending? What does the demand for credit look like? And then thirdly, how is that credit performing? And if you look through these lenses, then you get a pretty good view. So I mean U.K. consumer behavior is slightly cautious, but we continue to see signs of improvement, so credit spend is higher than debit spend. We've seen an slight increase in nonessential spending and confidence metrics have grown slightly. So, so far, so good.

And we also see that flowing into, for example, the demand for credit. And you can see that in terms of our U.K. momentum, the demand for mortgage credit is good. And as I said, that's not just refinancing. So in a very cautious environment, you see less house purchase. But what we see is, house purchase growth, first-time buyer growth and also refinancing demand.

There's good demand from cards, as you can see. And actually, the thing we talk about less is demand from corporates. And you can see really good lending in our corporate book. That is coming broadly half and half from existing clients as new clients. We've originated more than 400 new clients this year. That's on top of the 550 that we did last year, and our lending market share is up 70 bps. So we don't see a lack of demand for credit at a macro level. If we're looking for points that were slightly more hesitant, we would say we see a little bit of hesitancy in mid-corp but generally speaking, good demand for credit.

And then finally, credit performance is good. We see that in mortgages, we see it in cards. I mean U.K. cards' delinquencies are extremely low. And I would say across all of the portfolios are low and stable and exactly as we would have expected them to be. And the same is true of corporates. There are no significant single names in our corporate book. So the U.K. landscape remains pretty robust. But thank you, Andy, for your questions. Can we have the next question, please?

Our next question comes from Benjamin Toms from RBC.

The first is in relation to European Bank peer share suffered this week in relation to losing a U.S. litigation case. It was underpinned by the fact that the bank has provided finance to a sanctioned nation. I think that Barclays settled with the U.S. regulators in 2010 in respect to providing finance to a sanction nation. Can you provide any comfort for us why we shouldn't add this to a potential litigation risk for Barclays in the future?

And then secondly, in your Private Banking and Wealth Management, the AUM and AUS grew pretty quickly in the quarter. To what extent do you expect this organic growth trend to continue over the next 12 months?

In terms of the first point, there's nothing of which I would call out, Ben. We can follow up with you with a bit more detail about the historic cases, but nothing I would call out. On your second point, we continue to make good progress with the private bank, another GBP 0.7 billion of net new money in the quarter. So we're pleased with its progress. And obviously, its RoTE remains above its target level, which was greater than 25%, so pretty robust.

Obviously, the opportunity for that business, we believe, really comes in the future as we start to access the sort of mass affluent and wealth markets. So probably more to come on that, I wouldn't call out anything specific now. But again, thank you for the questions.

And then operator, perhaps we could have the next question, which I believe is our last question.

Our final question today comes from Edward Firth from KBW.

I just had a question on your '26 targets actually because if I look across the piece, I mean, you're pretty much nailing everyone and some by some margin. But I guess the one that stands out is the Investment Banking RWAs, which I can see you reiterated today at 50%, which is still quite a long way from where we are today. And I'm just thinking that in terms of -- if I look at the returns, that's the business that has -- the returns are significantly below the other divisions, I guess. And I would hazard that the cost of equity is higher as well.

And I guess that's probably the division which is the reason for you trading where you do. So I do think that 50% is quite an important target, particularly in terms of a statement of intent and where we see it going from there. But I don't really see how you're going to get there. And so just can you give us sort of some flavor? Are we talking about a big reduction in investment banking RWAs? Is there some sort of risk transfer you're going to do? Or are we looking at much bigger growth somewhere that I'm not thinking about? Because you're talking about more than a 10% swing there.

Okay. Why don't I start and then I'll hand to Venkat. So just in terms of the 50%, remember, when we wrote that we were in a very different environment in terms of regulatory timing, so there are 2 things that are under our control and one that isn't. The first is holding the IB RWA flat. We've actually done that for more than 3.5 years now. It's not just part of this strategy. It was there before. Secondly, continuing to grow in the U.K., and you can see the progress.

The thing that I can't control is the implementation date of the IRB model. That's very difficult to say, particularly on the call, or indeed, some of the Basel implementation effects. But the strategic intent that sits underneath that 50% remains the same, Ed, but there's regulatory timing that I can't control.

As to your point on returns, I mean we were really clear that the returns of the IB were not where they needed to be, but you can see that we're making progress. Just to call it out, it's 12.9% year-to-date, much more in line with the group versus 10.1% last year. So we are making good progress, but I'll hand to Venkat for more comments.

Look, I'll say exactly that. We were very, very clear at the start of our strategy that we were going to hold the IB RWAs flat. And the reasoning behind that was we felt and we feel we've got a very strong, capable full IB. And at those levels of RWA, with greater RWA efficiency, which we've demonstrated, it can be very competitive, and we've shown our competitiveness over the long time, over this period.

What we said also was that the percentage is an outcome, as Anna just described, which is based on not just holding it flat but growing in the U.K. and then assumptions about capital calculations for the rest of our book, particularly U.S. cards. The first two, we control, holding the IB RWAs flat, and then what we've been doing in the U.K. where we've been showing the growth which we said we would, right? The third part we cannot control, and that affects the percentage. And if you go beyond that strategically...

Just flat, which is the goal.

Yes. The flat is the important point.

Yes. That's exactly -- the flat is exactly the important point. And as Anna said, on RoTE, it's again been behaving exactly the way we would want. It's a returns-focused business. And it is approaching and in some instances, if you look at the time periods in the past, the group average. So exactly what was outlined exactly what has been delivered, promises kept. Thank you very much, everybody.

Thank you, everybody. Thank you, Ed, for that question. We will see you on the road from tomorrow, and we are looking forward to an analyst lunch as opposed to an analyst breakfast next Tuesday. So hope to see you all soon and thank you for your continued interest in Barclays. Thank you.

Thank you.

That concludes today's conference call. You may now disconnect your lines.