Barclays PLC (“Barclays”) plans to issue new SGD Additional Tier 1 subordinated notes with initial price guidance of 5.00%. The new notes are expected to be issued on 03 November 2025, with the first call date of 15 December 2031 and a mismatched first reset date of 15 March 2032. If not called, the coupon will reset based on the 5-year SORA-OIS plus an initial margin (to be determined) on the first reset date. The new issue will also reset every five years after the first reset date if it remains uncalled. This new issuance pays quarterly interest.
Barclays is currently rated Baa1, BBB+, and A by Moody’s, S&P, and Fitch, respectively, all with a Stable outlook. The new SGD AT1 issuance is expected to carry a BBB- rating from Fitch.
Barclays delivered a decent performance as of end 30 September 2025 (“3Q25”), with group income rising GBP 7.2B (3Q24: GBP 6.5B), underpinned by stronger banking and underwriting fees as well as robust financing income. Net interest income increased 16% YoY to GBP 3.3B (3Q24: GBP 2.8B), while the net interest margin widened 34bps to 3.68% (3Q24: 3.34%), demonstrating the bank’s ability to generate resilient income despite global interest rate pressures.
The Group’s operating expenses increased 14% YoY to GBP 4.5B (3Q24: GBP 4.0B), reflecting costs linked to the Tesco Bank acquisition and provisions for UK motor finance redress — both largely anticipated by the market. Despite this, the cost-to-income ratio remained healthy at 59% for the first nine months of 2025, comfortably within the FY25 guidance of 61%.
Pre-provision profit edged up slightly to GBP 2.7B (3Q24: GBP 2.6B), demonstrating steady underlying performance despite higher expenses. However, after-tax profit declined 6% YoY to GBP 1.7B (3Q24: GBP 1.8B), primarily due to a higher credit impairment charge of GBP 0.6B (3Q24: GBP 0.4B) linked to motor finance, partially offset by a 5 percentage points lower-than-expected effective tax rate.
Barclays’ capitalisation remains decent, with its Common Equity Tier 1 (“CET1”) ratio rising to 14.1% in 3Q25 from 13.8% in 2Q25 (13.9% after accounting for the announced GBP 500M share buyback). The CET1 ratio aligns with the bank’s five-year trend and remains comfortably within the Group’s target range of 13–14%. Nonetheless, the Group has a high regulatory requirement of 12.2% which translates to a thinner buffer as compared to other large European banking peers. We have low concern that capital ratios will breach regulatory requirements, given the resilience of group income, but the Group’s firm guidance on capital distributions—including buybacks and dividends—is likely to keep the buffer relatively thin going forward.
The Group also maintains a healthy funding and liquidity profile, with a liquidity coverage ratio (“LCR”) of 175% and a net stable funding ratio (“NSFR”) of 135%, comfortably above the 100% regulatory requirements. We think the funding base remains stable, anchored by the Barclays UK portfolio, with over 50% held in savings accounts and time deposits. The funding base is also well-diversified, supported by steady deposit growth across all divisions. The liquidity pool stands at GBP 332.9B, covering approximately 58% of total deposits, providing ample coverage.
Barclays’ asset quality remains broadly stable. The Group reported a loan loss rate of 57bps in 3Q25, within the expected range of 50–60bps through the cycle. The US Consumer Bank (“USCB”) segment accounts for the majority of the Group’s credit impairment charge (around 60%) and is expected to remain the primary driver of impairments, in our view. Nevertheless, stable delinquency trends in recent quarters indicate that the underlying quality of the US cards book remains sound. Across the Group, gross impaired loan ratio (stage 3 loans) and coverage also remain low and largely unchanged at 2.1% and 1.4%, respectively, in 3Q25.
Table 1: SGD Banking AT1 notes
At an IPG of 5.00% (final price guidance is expected to be adjusted downwards – we expect a high 4% range), the new issuance by Barclays appears rather attractive relative to its existing perpetuals (“perp”), which are trading tight, with minimal yield differentiation despite differences in call dates and reset margins. The notes also compare favorably against SGD perpetuals from peer banks, with Barclays’ perpetuals generally trading wider than peers despite similar or comparable credit ratings, offering a higher income for investors seeking higher yield.
Investors should note that the new issuance is an Additional Tier 1 instrument, ranking below senior and Tier 2 subordinated notes. As a result, it carries a higher risk, including non-call risk, potential deferral of non-cumulative coupons, and loss absorption features, which investors need to consider relative to other debt instruments. The new issuance will be more suitable for more aggressive investors but seeking the exposure of a stable issuer.
Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) holds a position in BACR 8.300% Perpetual Corp (SGD), and the analyst who produced this report holds a NIL position in the abovementioned securities.