UK banks in focus: Barclays and NatWest earnings preview
As the United Kingdom (UK) financial calendar turns towards mid-February, the London market braces for major disclosures from two of the country’s largest lenders. Barclays is scheduled to report full-year 2025 results on 10 February 2026, followed by NatWest Group on 13 February 2026. These updates arrive amid a backdrop of shifting interest-rate expectations, evolving credit trends and continued strategic transformation in the banking sector.
Key questions for UK banking sector
For investors, the principal question is whether both franchises can sustain profit momentum in an environment of moderating net interest margins, persistent cost pressures and uncertain economic prospects.
The backdrop for both lenders is coloured by expectations that the Bank of England (BoE) is expected to continue cutting base rates in 2026 – a development that could influence net interest income, credit demand and risk parameters.
Interest rate expectations significantly affect banking profitability through net interest margin dynamics. Higher rates traditionally benefit banks through wider spreads between lending and deposit rates.
However, rate cuts present challenges as lending rates typically fall faster than deposit costs decline. This compression threatens the exceptional profitability UK banks enjoyed during the recent rate-hiking cycle.
Credit quality considerations become more prominent as economic conditions evolve. Any deterioration in borrower health would require increased provisions, directly impacting profitability.
Barclays: Resilience through diversification
Barclays enters its results period with a narrative shaped by its diversified model and efforts to rebalance revenues across core UK banking and its international investment banking arm.
The bank’s most recent interim figures in 2025 showed solid progress: net interest income benefited from higher average interest rates, while non-interest income – including markets and advisory fees – delivered resilience amid volatile capital markets. Adjusted profit before tax for the first half of 2025 was up year-on-year (YoY), and Barclays reiterated that it was on track to meet full-year guidance.
Heading into its 10 February results, investors will watch several key metrics. Net interest margin (NIM) is central; as rate expectations evolve, Barclays will need to demonstrate that its interest-earning asset mix and deposit pricing strategy can mitigate margin compression.
Credit quality is another focus, with provisions and impairment charges under scrutiny as macro indicators shift. The bank’s capital position is robust, with CET1 ratios comfortably above regulatory minima, allowing good scope for continued dividends and share buybacks – a theme that supports income-oriented holders.
Investment banking adds revenue diversity
Barclays’ sizeable Investment Bank and Corporate segments also attract attention. Market conditions in the second half of 2025 were patchy, particularly in fixed income and foreign exchange, but merger and acquisition activity picked up late in the year.
Commentary on revenues from markets, underwriting and advisory fees will allow investors to gauge whether diversification continues to pay off or if Barclays remains overly reliant on interest income.
Cost discipline will be another key area. Barclays has embarked on efficiency initiatives intended to control operating expenses and improve returns on equity; evidence of sustained cost containment in the face of inflationary pressures and investment spending would be a positive signal.
NatWest: Domestic focus creates different profile
NatWest’s upcoming 13 February results will offer a contrast to Barclays’ globally diversified model, with the group’s earnings more concentrated in UK retail and commercial banking.
NatWest reported solid half-year performance in 2025, with strong net interest income growth driven by higher rates and an improving lending mix. However, the lender also signalled that operating costs and credit-related provisions were seasonally elevated, reflective of broader economic headwinds facing UK households and businesses.
For NatWest, the focus on 13 February will be on credit quality metrics, including impaired loan ratios, cost of risk, and forward guidance on provisions. With concerns over affordability, household debt burdens and small-business stress in parts of the UK economy, investors will look for clarity on how the bank is positioning its loan book for a potentially weaker macro backdrop. Net interest margin trends will also be dissected, particularly as deposit pricing dynamics and base-rate expectations evolve.
Capital returns and dividend policies
Like Barclays, NatWest’s dividend policy and capital return plans are important considerations. The bank has maintained a progressive dividend approach backed by strong capital buffers, but investors will be alert to any change in confidence around payout sustainability, especially if credit costs rise or margins compress.
UK banks traditionally attract income investors seeking dividend yields. Both Barclays and NatWest offer significant distributions, making dividend sustainability crucial for share price support.
Operating expenses will again be under review, with NatWest’s ongoing investment in digital transformation and branch optimisation needing to be balanced against cost control imperatives. Its strategic priorities – including deeper penetration of the UK mortgage market, expansion of commercial lending and a focus on customer digital engagement – will be weighed against execution risk and cost impact.
Contrasting banking models
Together, Barclays and NatWest represent two distinct banking models within the UK market: one with significant international and investment banking exposure, the other anchored in domestic retail and business lending.
Their respective results will offer a snapshot of how these strategies are faring amid a cycle of slowly easing interest rates, variable credit demand and intensifying regulatory focus on capital and risk management.
Key cross-cutting metrics that investors will monitor include net interest income growth, margin pressure, cost-income ratios, credit loss provisions, balance-sheet quality, and capital ratios.
Guidance for 2026 – particularly around profit growth, dividend policy, and risk appetite – will also be critical in shaping market expectations for the sector.
In a marketplace where valuations are sensitive to both macro trends and idiosyncratic execution, strong performance from either bank could reinforce confidence in UK bank equities, while weaker than expected figures or cautious guidance could spark broader sector repricing.
The diversified versus focused debate continues in banking strategy. Barclays’ international diversification provides revenue stability but adds complexity. NatWest’s UK focus creates simplicity but concentrates risk.
Competitive dynamics in UK banking
Both Barclays and NatWest compete with HSBC, Lloyds, Santander UK and challenger banks across various segments. Competition intensity affects pricing power and market share.
Digital challengers including Monzo, Revolut and Starling have disrupted certain segments, particularly current accounts for younger demographics and traditional banks must invest in digital capabilities to compete.
Mortgage market competition remains intense with numerous providers competing for market share amid low switching rates due to customer inertia which benefits incumbents.
Business banking competition varies by segment, with small businesses having more choice whilst large corporates maintain relationships with multiple banks.
Barclays and NatWest analyst ratings
According to LSEG Data & Analytics, analysts rate Barclays and NatWest as a buy, but Barclays more so.