[ad_1]
The Barclays (LSE: BARC) share price had a rip-roaring 2025, climbing 77% over the year. But it was pipped at the post by Lloyds Banking Group (LSE: LLOY), which surged 79%. Can their eye-popping run continue into the New Year?
All the big FTSE 100 banks have benefitted from higher interest rates, which boosted their net interest margins, the gap between what they pay savers and charge borrowers.
FTSE 100 racing demons
However, with the Bank of England and US Federal Reserve cutting interest rates again in December, and more reductions anticipated in 2026, margins may now come under pressure. I expect a tougher year ahead for both Barclays and Lloyds. But which looks the better bet for the year ahead?
Barclays has travelled further and faster than Lloyds over two years. Its shares are up a jaw-dropping 205% over that timescale, almost double Lloydsâ 104% rise. It helped that Barclays dodged the motor finance scandal that hit Lloyds via its Black Horse division. But I wonder if Barclays will find it harder to keep up that blistering pace.
The stocks are no longer the giveaways they were in 2023, when I bought Lloyds. At the time, both traded on a price-to-earnings (P/E) ratio of six or seven. Today, Barclays has a P/E of 13, while Lloyds is higher at 15.4. Neither looks excessively expensive, but neither screams bargain either.
On a price-to-book basis, Barclays again looks better value, at around 0.85, compared with Lloyds nearer 1.25. Valuations suggest Barclays may have slightly more scope for further gains, although that’s not an iron certainty.
One key measure analysts watch closely is return on tangible equity (RoTE). Lloyds is forecast to generate a RoTE comfortably above 15% across 2026, boosted by its focused UK retail banking model and structural hedge that supports interest income as rates move. Barclays has a slightly lower expected RoTE at just under 13%. That’s still solid, and supported by a more diversified business that includes US investment banking. That broader mix can add volatility, but offers potential for a higher price if markets do well.
Stock forecasts
So what do the experts say? For Barclays, consensus analysts produce a one-year share price target of just under 474p. That’s fractionally below where the shares trade today. For Lloyds, the target sits around 101p, roughly 2.6% higher. In both cases, it’s clear that growth expectations have dramatically cooled after such a strong run.
Income seekers should note that Barclays offers the lower yield, forecast at about 1.94%. However, management prefers share buybacks as its main way of returning cash, and is expected to be generous. Lloyds is forecast to yield around 3.7%, which suits me, as I prefer to see big fat dividends landing directly in my account. It’s a personal thing.
Overall in 2026 ,Lloyds may just sneak it on higher income and steadier returns, but Barclaysâ valuation and diversified model mean it could still surprise. Either way, one thing is certain. Long-term patience will matter more than short-term fireworks. With that in mind, both banks are well worth considering today.
The post Can the rampant Barclays share price beat Lloyds in 2026? appeared first on The Motley Fool UK.
Should you invest £1,000 in Barclays PLC right now?
When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Barclays PLC made the list?
.custom-cta-button p
margin-bottom: 0 !important;
color:#cc0000;
div.entry-footer div.textwidget div.braze-content-card div.wp-block-custom-block-collection-presentational-card
padding: 0 !important;
margin: 0 !important;
More reading
- Lloyds’ share price near £1: has the easy money already been made?
- Can Barclays shares do it all over again in 2026?
- Will Barclays shares continue their epic run into 2026 and beyond?
- Could the Lloyds share price surge by 100% in 2026?
- 3 reasons the Lloyds share price could keep climbing in 2026
Harvey Jones has positions in Lloyds Banking Group Plc. The Motley Fool UK has recommended Barclays Plc and Lloyds Banking Group Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
[ad_2]
Source link