Barclays (LSE: BARC) shares briefly topped £5 at the start of February, the highest since the financial crisis. The FTSE 100 bank has since been knocked by the uncertainty over Iran, and concerns over the shadow banking sector. Yesterday (1 May), they traded at just £4.30, a drop of 14%. Is this a buying opportunity?
Long-term investors will take the dip on the chin. The Barclays share price is up 135% over five years, and 43% over 12 months. Those who don’t hold the stock, or would like to hold more, may be licking their lips. The shares could fall again next week, possibly below £4, depending on events in the Middle East. But is there any point in waiting?
Is this stock too red-hot to resist?
Barclays has been making an awfully lot of money lately. It posted a record £9.1bn pre-tax profit in 2025, up £1bn on the year before. Profits have been humming along nicely for some time, with a blip in 2023. That blip was down to a £927m restructuring charge, disappointing investment performance, and declining net interest margins as customers shifted cash into higher interest accounts. Profits are firmly in the ascendancy today.
2025 – £9.1bn
2024 – £8.1bn
2023 – £6.6bn
2022 – £7.0bn
2021 – £8.4bn
On Tuesday (April 28), Barclays reported a 3% rise in Q1 2026 profits to £2.8bn. Total income grew 6%, but higher costs and increased impairment charges worked against that. The headline issue was a £823m credit impairment charge, driven by a £228m hit from the collapse of a ‘single name’ shadow bank customer. Barclays also had to increase provisions for the motor finance mis-selling scandal by £105m, although it got off pretty lightly compared to rival Lloyds. The shares fell almost 3% on the day.
I think Barclays now looks superb value with a forward price-to-earnings ratio of just 7.7. That’s roughly in line with it’s 10-year average. Perhaps Barclays always will be cheap, measured by its P/E. I’ll be keeping a close eye on that in future. But it does look very tempting today.
Can the FTSE 100 bank benefit from current volatility?
Other banks offer bigger dividend prospects. That’s largely because Barclays plans to reward investors primarily through share buybacks. Despite that, the forward yield is a decent 3.5% for 2026, and forecast to hit 4.25% in 2027. Between 2026 and 2028, Barclays expects to return more than £15bn to shareholders, in total.
Barclays has retained its US investment banking division, and should benefit from increased trading during recent stock market volatility. It’s been expanding its Middle East operations, although geopolitical uncertainty may knock that.
Rising interest rates may work in its favour, allowing it to widen the margin between what it pays savers and charges borrowers. However, if the oil price spike drives the world into recession, it will struggle like all the banks.
I think investors have been a little hard on Barclays lately and its shares look compelling with a long-term view. Growth, income, buybacks, what’s not to like? I think it looks great value at £4.30 and is worth considering.
