Barclays (BCS) Q2 2026 Earnings Call Transcript

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DATE

Tuesday, July 28, 2026 at 4:30 a.m. ET

CALL PARTICIPANTS

• Group Chief Executive - Coimbatore Venkatakrishnan
• Group Finance Director - Angela Cross

TAKEAWAYS

• Group Income -- GBP 8.3 billion in the second quarter, an increase of GBP 1.2 billion compared to the prior year.
• Profit Before Tax -- GBP 3.3 billion, representing growth of more than 30% year over year.
• Return on Tangible Equity (RoTE) -- 16.1% for the second quarter and 14.8% for the first half of the year.
• CET1 Ratio -- 14.3% at quarter end, with management intending to operate at the top of the 13% to 14% target range.
• 2026 Income Guidance -- Upgraded to circa GBP 31.5 billion from the original target of approximately GBP 30 billion, reflecting broad-based franchise growth.
• Shareholder Distributions -- GBP 1.8 billion announced for the second quarter, comprising a GBP 1 billion share buyback and an GBP 800 million interim dividend.
• Group Net Interest Income (NII) -- Upgraded 2026 guidance to more than GBP 13.7 billion, excluding the Investment Bank and head office.
• Barclays UK Performance -- RoTE of 20.4% with income growing 7% year over year and costs remaining flat.
• Investment Bank Returns -- RoTE increased to 16% from 12.2% in the prior year, with income to average risk-weighted assets (RWAs) rising to 7.7%.
• Equities Income -- Grew 44% year over year, driven by equity derivatives and prime financing performance.
• U.S. Consumer Bank RoTE -- 30.2% for the quarter, or 10.5% when excluding the gain from the American Airlines portfolio sale.
• Best Egg Acquisition -- Completed in May 2026, adding approximately GBP 11 billion of managed balances.
• Efficiency Savings -- GBP 350 million of gross efficiency savings achieved year to date, including GBP 200 million in the second quarter.
• Cost-to-Income Ratio -- Improved to 54% in the second quarter from 59% in the same period last year.
• Structural Cost Actions -- Up to GBP 500 million in additional actions anticipated for the second half of 2026 to drive 2027 efficiency.
• U.K. Corporate Lending -- Increased 12% year over year, with the lending market share rising 70 basis points over the last 30 months.
• Structural Hedge Income -- Accounted for circa 45% of group NII in the second quarter, with reinvestment occurring at a 4.3% yield compared to the 3.5% planning assumption.
• Private Bank and Wealth Management -- RoTE of 26.9% in the second quarter, with client assets and liabilities growing 8% year over year.
• Mortgage Activity -- GBP 10 billion in gross completions during the quarter, representing the highest quarterly volume for the bank.
• U.K. Business Growth RWAs -- GBP 25 billion deployed since 2024, on track for the GBP 30 billion target by the end of 2026.
• First Half Distributions -- GBP 2.3 billion, representing an increase of 61% compared to the first half of 2025.

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RISKS

• Cross stated, "The more material impacts in U.S. cards are actually around non-NII... because the reference rate is a little bit higher than we anticipated, but APRs haven't really moved," noting that higher benchmark rates compressed securitization pricing for originate-to-distribute loans.

SUMMARY

Management reported a significant increase in group income and profitability, driven by performance across all three U.K. segments and the Investment Bank. The company upgraded its full-year 2026 income guidance and reiterated its 2028 return targets, supported by structural hedge tailwinds and operational efficiency initiatives. Strategy remains focused on diversifying income streams toward more stable financing and retail sources while modernizing technology platforms through structural cost actions. The company continues to prioritize shareholder returns, meeting its interim distribution objectives through increased dividends and a new share buyback program.

• CEO Venkatakrishnan emphasized the move toward an all-weather return profile, stating, "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."
• The company is utilizing a change in the compensation mix for material risk-takers to improve cost flexibility, with Cross noting that awards granted from 2027 will shift toward higher variable and lower fixed pay.
• Investment Bank strategy has resulted in equities now accounting for approximately 32% of markets income compared to 22% in 2023.
• Management confirmed that the U.S. Consumer Bank operates as a digital-only entity with over 25 million customers and no physical branches.
• Barclays removed custody charges for all direct investing customers on May 1, 2026, to attract self-directed investors and deepen U.K. retail relationships.
• CEO Venkatakrishnan noted a shift in U.K. corporate sentiment, stating, "Corporates have had the capacity to invest, but not the confidence. This seems to be changing," as seen in the 12% growth in corporate lending.
• The company expects the acquisition of GoHenry to complete in the fourth quarter of 2026, aimed at capturing the next generation of U.K. banking customers.

INDUSTRY GLOSSARY

• CET1 Ratio: Common Equity Tier 1, a measure of a bank's core equity capital compared to its total risk-weighted assets.
• RoTE: Return on Tangible Equity, a financial ratio measuring a bank's profitability relative to its tangible shareholders' equity.
• NII: Net Interest Income, the difference between the interest income a bank earns from lending and the interest it pays to depositors.
• RWAs: Risk-weighted assets, used to determine the minimum amount of capital a bank must hold to reduce the risk of insolvency.
• Structural Hedge: A strategy used by banks to reduce the volatility of net interest income by fixing the interest rate on a portion of its deposits and equity.
• ISA: Individual Savings Account, a tax-efficient savings or investment account available to U.K. residents.
• SCA: Structural Cost Actions, specific investments or accounting charges taken to reduce future operating expenses.
• TNAV: Tangible Net Asset Value, the value of a company's physical assets divided by the number of shares outstanding.

Full Conference Call Transcript

Operator: 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.

Coimbatore Venkatakrishnan: 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.

Angela Cross: 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.

Coimbatore Venkatakrishnan: 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.

Chris Hallam: 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?

Angela Cross: 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?

Coimbatore Venkatakrishnan: 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.

Alvaro de Tejada: 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.

Angela Cross: 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.

Coimbatore Venkatakrishnan: 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.

Guy Stebbings: 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.

Angela Cross: 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?

Coimbatore Venkatakrishnan: 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.

Jonathan Richard Pierce: 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.

Angela Cross: 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.

Benjamin Toms: 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?

Angela Cross: 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?

Coimbatore Venkatakrishnan: 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.

Christopher Cant: 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?

Angela Cross: 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?

Coimbatore Venkatakrishnan: 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.

Angela Cross: 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.

Edward Hugo Firth: 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?

Angela Cross: 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.

Edward Hugo Firth: 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?

Angela Cross: 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.

Andrew Coombs: 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?

Angela Cross: 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?

Coimbatore Venkatakrishnan: 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.

Angela Cross: 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.

Amit Goel: 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.

Angela Cross: 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.

Pui Mong: 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?

Angela Cross: 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.

Nicolas Payen: 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?

Angela Cross: 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.

Coimbatore Venkatakrishnan: 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.

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

Alberto Artoni: 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?

Angela Cross: 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.

Alberto Artoni: 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?

Angela Cross: Yes. Increase confidence.

Coimbatore Venkatakrishnan: 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.

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

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