Good afternoon. I think I know most of you in the room, but for those that I don't, I'm Jason Goldberg and I cover the U.S. large-cap bank stocks at Barclays. Thank you for attending our 23rd annual Global Financial Services Conference. The feedback so far on the presentations and the meetings this morning has been terrific, and I'm sure the rest of the conference will measure up. I am very excited to showcase Barclays at lunch again this year. You may recall last year Barclays announced a new three-year plan to create a simpler, better, and more balanced company, aiming for stronger returns, greater shareholder distributions, and operational excellence by having a simpler structure, better operational financial performance, and more balanced businesses. Results so far have kind of lived up to that.
They've kept pace with kind of strong financial targets that laid out, and the stock market and my wife have certainly taken notice. We're pleased to welcome Venkat and Anna back to the stage this year. Venkat has been Barclays' Group Chief Executive since November 2021. Prior he was Head of Global Markets and Co-President of Barclays Bank and was Group Chief Risk Officer before that, while Anna has been Group Finance Director since April 2022. A perfect business mix, two perfect resumes to make for a fruitful lunch discussion today. So, Venkat , Anna, thank you so much for joining us.
Thank you, Jason.
Maybe the best place to start, and I kind of touched on it in my opening remarks, was you presented a three-year plan in the beginning of last year. We're through the first half of results of 2025. Maybe just how do you feel about the progress so far? How confident are you in delivering your 2026 commitments? Maybe you can also just share some of your thoughts on what we could expect beyond 2026.
Thank you. First of all, thank you all of you for coming. I said it at the opening this morning, but we really value the franchise that Barclays has built overall, Jason, this 23rd year of the conference. For all of you who are clients of the bank, for your partnership with Barclays, we don't take anything for granted, and we value your attendance, the time you're giving us, and the engagement. This conference has done very well because of your participation. Thank you. I need to answer your question. I'm very, very pleased with the progress so far. I look at it in two ways. First, there's the numbers. We've had, over the last six quarters, since we announced the plan, but actually going before that, strong and improving financial performance.
When we just reported Q2, for instance, income was up 14%, PBT was up 28%, and earnings per share up 41% versus a year ago. We've had eight quarters consecutively of tangible book value growth. In that quarter, all five divisions of the bank produced double-digit RoTE. We've announced since the start of this plan, GBP 1.4 billion worth of capital distributions, and a buyback that was 21% up year- on- year. All that's good, and that GBP 1.4 billion was as part of a GBP 3 billion total capital distribution over this three-year plan. We're making progress on all the things we said we'd do.
Of course, we are committed to delivering and confident in delivering our targets for next year through the end of 2026, which is a group RoTE of greater than 12%, distributions, as I said, of greater than GBP 10 billion, and the investment bank coming to about 50% of the group, right, circa around that. What that does is that it takes, it's changing the profit signature of the bank, right? We're getting more returns and more capital invested in the higher-returning parts of our bank, which are in the U.K. We said we'd allocate GBP 30 billion worth of RWAs to these parts of the bank in the U.K., our U.K. retail bank, our corporate bank, private banking, and wealth. We're at GBP 17 billion at the half year, so well on pace.
While changing the mix, keeping RWAs in the IB table, and by the way, they've been stable since around 2023, and getting more returns per unit of RWA from the IB, so greater capital efficiency, we've had a CAGR in the investment bank of around 9% since this plan began, or actually for the last three years. All that's going well. That's the numerical part, right? If you step back, or I step back, what are we trying to do here? We're trying to create a bank that has great strategic focus, financial strength, management disciplines, operational rigor, prudent risk management, ultimately to drive shareholder delivery. Each of these things is important when you run a bank.
When I think about it, one of the interesting things about the journey we've been on is that, of course, it forces you to do all the things I just said, but also you learn how to get better at it, and you learn what the potential of the bank is. You learn how much more you can do. To me, that's actually been, in the last number of months, the interesting part of the journey, right? What we're working on now in our heads is to understand what that potential is, to gauge it, to estimate it, and then to decide how we're going to deliver it and to target delivery. You can, you know, obviously, while we do that, we're going to give new financial targets before the current ones expire, but what you should hear from us is great confidence in achieving the current ones.
If I can add a word.
Or, two.
Because I do like to add, the word that I've been looking for is consistency. What's really important here is that we are delivering to the new profit signature that Venkat talked about, but we're doing it quarter in, quarter out. One of the things that I look at is what's the trailing 12 months RoTE of the business. When we started out on this plan, it was 10, then it went 10.1, 10.4, 10.5, 11, and now we're at 11.1. This is about growing income, growing the stability of that income, holding the cost tightly and driving efficiency through the firm, and managing risk well, as Venkat said, and letting that drop to the bottom line. That is the pattern of delivery that you are seeing, and you should expect to see beyond 2026.
It's been successful, clearly we are going to continue that kind of formula. There are a few things I'd call out, particularly the structural hedge. We talked about that, and I'm sure we'll go there again. That structural hedge has considerable momentum even beyond 2026 into 2027. The kind of stability and growth that you can see in the IB and coming from the U.K. growth will continue. As Venkat said, we will deliver you some new targets, but expect the pattern and formula of delivery to be very consistent with what we're currently doing.
Got it. Feel confident in greater than 12% RoTE for by 2026, and then come next year, we'll get something presumably that's above 12%, maybe approaching maybe somewhere the U.S. banks are approaching.
The CFO smiles. That's all I can see.
The CFO is thinking, please don't answer that question.
As she noticed, I didn't.
That's informative. I guess maybe shifting gears to the U.K., that's something that I was told to make sure to ask about. We regularly hear reports of our U.K. businesses and households struggling about low growth and confidence. In also recent weeks, we've read about weakness in kind of long-dated gilts and about a report on new bank tax. It feels like it's kind of rhetoric has died down here and maybe picked up over there. Maybe just, you know, what do you think about the U.K.'s economic prospects and gilt yields? Are you worried about these new bank taxes and how does it affect the kind of plans that are growing in the U.K.? You know, are you able and willing to deploy? You talked about that $30 billion in risk-weighted assets. Just how you're thinking about that.
Yeah. This is a rich set of questions. I'll give a front-quick answer and then I'll elaborate if I may. First of all, on yields, U.K. yields have basically moved with global yields just with a higher beta. This is largely technical. It's not a fundamental issue yet, in my opinion. The fundamental issue in the U.K. is growth. The government has this absolutely front of mind, and I'm confident that they are up to the challenge and going to put in place the policies or putting in place the policies to drive that higher growth. Obviously, that is a challenging task because you're going to have to make decisions about investment, spending, taxation. One part of that taxation that you've heard about is bank taxes.
I think additional bank taxes in the U.K., where U.K. banks are subject to some of the highest taxes in the world, additional bank taxes are not a good idea in any way, shape, or form. If I can be clear, I think it's not a path to higher growth in the U.K. Right now, I think most economists would agree. Net-net, we are extremely confident in the U.K. We are committed to that extra GBP 30 billion of RWA deployment. As I said, we're well beyond halfway at GBP 17 billion. We expect that as our home market to be central and a growing central part of the bank. Now, let me elaborate. First of all, on yields. U.K. yields, as I've said, are basically long-dated gilts is what people focus on, have been moving along with the broader market, but moving with a higher beta, a beta of about 1.5-ish.
In fact, if you look at the last three days, and I'm going to get the numbers approximately right, maybe approximately wrong, but in the last three to four days, including today, 30-year gilts have rallied, I mean, U.S. Treasuries, 30-year Treasuries have rallied by around 25 basis points, and gilts have rallied by around 40-ish basis points. There was news in the U.S. There was snort from payrolls on Friday. There's been essentially no news from the U.K. If you look at it day by day, roughly that's what's happening. That's technical. Now, why does it go with a higher beta? I'm sorry, Jason, I'm an old bond geek, so you'll forgive this answer. Why does it go with a higher beta? Goes with a higher beta for a couple of reasons. One, advantages from the U.K. is they've got a deep liquid market for gilts.
It's actually a longer maturity profile market. The average maturity of the U.K. bond market, the gilt market in issuance, is around 15 years. It's about seven years for the U.S. Because of that, there is a larger volume at the longer end. The U.K. has had a weaker fiscal profile, which I'll come to in a second. It allows it to be, if you like, the choice of medium in which to express the trade. These are all technical issues, right? The fundamental issue is growth, on which I'm optimistic. By the way, on the technical side, just to stay there for a second, the U.K. has options because it is a very transparent, liquid, well-governed interest rate market and gilt market with a strong pattern of issuance. They can control the issuance. They can make the issuance more short-dated. They've already got a longer profile.
As you can imagine, Barclays plays a very large role in U.K. government bond issuance and gilt issuance. There was an auction last week, 10 years, I think it was GBP 4 billion or so, 10 times oversubscribed. There is strong institutional demand for gilts, right? I think there are means. It's been operating with a higher beta, but I view it as technical and being sympathetic with global market yields. You come to the fundamental question. The fundamental question is, how's the U.K. economy doing? The U.K. economy, what I would say, has had higher inflation, right, stubbornly, 4%-ish versus 2% elsewhere, on-trend growth at around 1%. That 1% should be higher. Reasonable wage growth and wage inflation, which is double-edged. That part of the U.K. is, I think, basically fine. What the government has to do is to increase that growth number from 1% to something higher.
I think that comes from deep structural change in the economy, from investments in the right forms of the sectors. It's front and center for them. I'm confident that they're going to put in the necessary mechanisms to get that growth. As I said, it involves hard choices, right? It involves choices of spending, choices of taxation, choices of where to make the investments. We have to watch that. This government has four years left. When you think about it, one of the choices was, as we said, bank taxes. U.K. banks pay approximately 48% tax rates versus 28%-ish in the U.S. I think the highest in the EU is 39%. We can say hand to heart we gave it the offense. Additional bank taxes would be damaging to the economy as a whole and damaging to an important sector of the economy, which has about 10% of all employment.
Lastly, I would say, of the top seven taxpayers in the U.K., the banks are the top four, Barclays being one of them. I think the route to this growth is through investment, through appropriate forms of spending and taxation, but not through bank taxes. Net-net, we are very confident in the right answer. We are very confident we'll get it. We are confident we'll get the growth, and we continue to be invested in the U.K. in a big way. We have choices, of course, as a multinational bank. Choice we make.
I think the U.K. consumer, the U.K. corporate has been incredibly resilient, whether it's post-Brexit, all the way through COVID, out of that into the affordability difficulties that we've seen, very, very consistent performance. Actually, we see good opportunities to grow. You can see that in our numbers. We've had four consecutive quarters of mortgage growth. What we're doing now is we're able to deploy the Kensington brand into our overall mortgage portfolio, and that's allowed us to put a lot more products out there, much more breadth. The Kensington product range has a margin which is about four times higher than the equivalent Barclays product. In cards, we are generating very, very good acquisition volumes, so the demand is there. Of course, again, their brand matters. Because remember, Barclays until very recently was a single brand entity as it came to retail in the U.K.
Now in mortgages, you've got Barclays and Kensington. When it comes to cards, we've got Barclaycard, we've got Tesco, we've got Amazon, we've got Avios. It really allows us to go to market. We've originated 1.6 million new card customers since the beginning of the plan. Actually, corporate growth, which you might expect to be one of the weaker areas, given some of the economic backdrop that Venkat's talked about, has been very resilient. We've now seen three quarters of consecutive corporate growth because the areas that we set out to grow in the plan were areas where either we under-indexed in mortgage in market share or areas where we'd ceded market share over time. We've got opportunities to grow. We're using those new brands and the new digital capabilities. As Venkat said, we've delivered GBP 17 billion at the halfway mark.
We're running at a little over GBP 2 billion per quarter, and we've got six quarters to go. That's why we're confident. If anything, the momentum's picking up.
Maybe shifting gears, you know, there's been speculation in the press that Barclays is considering M&A activity in the U.K. Maybe just talk to your philosophy around acquisitions. How does that tally versus your comments that you want to operate in the upper end of the 13 - 14% CET1 target and your commitment to return GBP 10 billion to shareholders?
Yeah. I spoke at the beginning about the importance of shareholder delivery. One of the things we said was when we laid out this plan, what is the importance and the way in which we look at the capitalization of the bank? Number one, we want to be a well-capitalized institution. Number two, we put our shareholder return priorities next. Number three, subject to that, we look at investment in organic or otherwise. Our plan is an organic plan, right? We've made a couple of inorganic acquisitions in the past. Anna mentioned Kensington, a mortgage company. We did Tesco, which is a bank more credit card-oriented. When it comes to inorganic, as I said, that's not plan A. We would always look to try to get three things. One is either get scale or capability and/or capability and at a good price.
We would do something if it met all three criteria, right? Scale, capability, and a good price. Of course, fit in to the overall capital hierarchy. We've not seen anything yet that has.
Fair. I guess, Anna, you mentioned before structural hedge. In the uninterested income, it is certainly a part of the story. We've had kind of an evolving interest rate backdrop now, kind of falling, I guess, in the U.K. Maybe just talk to, you mentioned material tailwinds from structural hedge. I'm not sure everyone in the audience actually knows what structural hedge actually means. Maybe just expand on that a little bit and just talk about how that kind of drives NAI.
Do you want to start with a, I'll hand to the ex-CRO to start the conversation.
I have to tell you, I joined Barclays nine years ago, having spent my life in the U.S. banking system. I was told about the structural hedge. I thought it was something from the moon. I then had to get my head around it. It took me a while. And I will say to you that now I've become converted and I have the zeal of a convert, which is that I think it is a very good way to manage interest rate risk in the banking book. What it basically does is that you obviously have a deposit base. What you do is after you hedge out all your products and your assets, you buy interest rate swaps. We do it with a roughly five-year maturity, but on a ladder. It keeps rolling down to get a higher yield, right?
What you're trying to preserve is a relative constancy of the yield through the interest rate cycle. Your option is to be entirely floating or your option is to do this. If you get this right, what happens is you get a more stable net interest income profile or even a NIM profile over time. What you give up is that when rates rise, your number rises more slowly, and when rates fall, your number falls more slowly. You lag in a rate rise and you lag again in a rate decline, but you do outperformance. It actually works well both from a predictability of earnings and income and from managing interest rate risk in the banking book because it forces you to ask exactly deep questions about what you think about your deposit base, the stability of your deposit base, and how much you're going to do this.
Those of you who find this unfamiliar and look at other banks, I suggest taking a look at this. It's actually very instructive. With that, Anna.
We are in that position at the moment where we're seeing continued momentum. Just because the maturing yield on those swaps that are coming up now is below the yield at which we will refix them in the market, that's what's happening. The maturing yield over this year and next is around 1.5%. Even in 2027, it's 2.1%. That means that the pickup in the current interest rate environment with each passing month, as we roll a bit more of this hedge every single month, is very predictable. We've actually locked in 80% of the structural hedge income for 2026, even now. As we look ahead into 2027, 2028, and beyond, it gives us a really good framework, a really good picture about what we expect our net interest income to do.
What's really important for us as we think about the next stage of our plan is what happens beyond that, which is why we're very focused on lending. Clearly, we want a strong lending portfolio so that inevitably when the rate cycle does turn, it's turning now, but the structural hedge starts to catch up with that. Actually, what we've got is growing net interest income coming from the asset side of the book. For now, and actually for the reasonable future, certainly through this plan and the next, we should expect to see that considerable momentum.
Maybe kind of turn to this side of the pond. You know, on the consumer front, maybe just talk to you if you're seeing any signs of deteriorating the economy or signs of stress. You know, in your book, we got a non-farm payrolls number last Friday that some people took exception to. Any thoughts you may have?
It's a bit like the U.K. , you know, the performance is very, very resilient. If you start at the macro level for the U.S. consumer, cash deposit levels remain very high. Real wage growth remains very robust. The degree of kind of unsecured leverage in each household is much, much lower than it has been historically. Even though there are, if you like, some macroeconomic signs, that is not translating through into consumer behavior as we see it. In fact, consumers have continued to perform really well in our U.S. cards book. Remember that our FICO score is relatively high. Our average FICO is over 750. Around 12% of the book is less than 660. It's actually quite a tight distribution, if you like. About 40% of the book is over 760. We are tending towards a sort of prime, super prime base. Delinquencies have been very stable.
In the second quarter, they performed really well, fell quarter on quarter, as you would expect them to seasonally, and actually were better year- on- year, even at the lower risk cohorts, which is good to see. Overall, we don't see any signs of stress in the U.S. portfolio. Very robust.
Can I just add something? You didn't ask about the U.K., but let me talk a little about it. We get through our payments business. We see about a third of all payments that go through the U.K. One of the fascinating things which we do internally is we look at the growth of spending through this payments book and compare it to inflation. In the last three years, what I've seen over and over, month after month, is whatever the trailing 12-month public inflation number was, the growth of spending in our book is about half of that, give or take. If inflation was post-COVID highs, 8% or 9%, it was 4.5%. If it's 4%, it's 2%. If it's 2%, it's 1%. If it's 1%, it's 0%-ish.
That lower growth comes from people economizing, spending less, spending more carefully, meaning going down in quality, going down in size, going down in something else, and then shifting between discretionary and non-discretionary. That's great for the credit portfolio. It's great for employments in the banks. What it's not so good for is ultimate economic growth because spending is a part of that. I think it gives you a clue to what the U.K. has to do because people have to have confidence in their jobs and confidence in wage growth in order to spend more. It's a good credit story, but it's part of what has to change ultimately.
Helpful. This question is not my question. It's from investors. I'll preface it. They do ask about the U.S. Consumer bank and kind of what does it bring to Barclays? Quite frankly, is Barclays the best owner of it? I guess linked to this, you've stated to deliver improved returns in this division, but it's still below that kind of 12% number we talked about earlier. What gives you confidence you can deliver that and then even higher returns looking out?
Maybe Anna will start.
Yeah.
Let me say that the U.S. Consumer bank is an important and fundamental part of Barclays. What does it bring to us? It brings us many, many important attributes, but just a couple. First, it brings you diversification on its own, right? Because it is a component. It's about 7% of the capital of the bank. It's a big part of the non-investment bank portion of the bank. As you know, we are trying to keep the investment bank stable in RWAs and grow the rest so that the investment bank becomes proportionally a smaller part of the bank. The consumer bank at 7% is an important contributor to that. Second, it fulfills a really important need for our corporate clients. Just a couple of weeks ago, we onboarded the credit card portfolio of General Motors, right? 2 million customers.
This co-branded proposition which we have represents a really important part of the overall U.S. cards market. In fact, I think there was an article yesterday in the Wall Street Journal talking about the importance of credit cards to airlines. If you then extrapolate, 35% of the U.S. credit card market is co-branded. That means companies which want to operate credit, unsecured debt, and lending in their name, not in the name of the bank, right? For us, our strategy in the U.S. is not a brand-led strategy. This fits perfectly with us. It's good for us, and it's good for the customer because we are not competing on a brand. Third, for us, we've got through this 20-odd million customers in the U.S., $30 billion in balances. It's not the biggest player, but in this space, it's an important player.
It gives us access to the largest, most sophisticated consumer market in the world and allows us to be a very important player in unsecured debt in this market, right? We've developed, with these strategic advantages, we are developing and have developed the full suite of consumer tools, including a very good online banking app, which gives you very good rates, I might add. We're a strong operator in this space. We've got 20+ years of experience. You'd accept all of this if you thought this is great, and then is it profitable as well? We are moving quickly towards that target level of profitability of 12% odd. The long-term RoTE of this business, we think, can be what it was before, which is greater than 14%. We expect to make our target RoTE of 12% in 2026, greater than 12%.
We are doing this through greater digital execution, better digital execution, more retail deposits, cheaper deposit funding, and managing the entire operational cost of this business. One of the questions we get asked is, are you the best holder because your capital cost as a U.K. bank under U.K. regulations may be higher than what a U.S. bank does? That is true. If that's the only measure at which you looked at, you might wonder. For us, remember, part of that capital cost goes into RoTE, but there is diversification, which somebody once said is the greatest free lunch in the financial markets. That diversification for us is important, both for our U.S. business and for the business overall.
You take all of that together, the value we bring to our corporate customers, our comparative advantage in it, the place in which we play co-branded, the right sizes of that portfolio, the enormous customer reach, our operational scale, efficiency, and capability, and the fact that we can run it profitably, it's good for us, it's good for our clients, it's an important part of our strategy.
Yeah, I mean, just to add a few, this is a business that previously was subsumed within a much broader part of the bank. It was part of a broader division. We exposed it as part of our strategy last February. In so doing, we've been really transparent both about its existing level of returns, which needed some improvement, and the paths together. That should tell you something about the confidence that we have in being able to execute against that. It is a plan in many parts. As we looked at this business versus its competitor set, it felt to us that work needed to be done around the optimization of pricing. That was done last year. You can start to see it now flowing through into the NIM. Actually, our funding costs were relatively high relative to our peers.
What we've done now is we are growing more strongly. The retail deposits that we're getting in the Delaware business, they're up by nearly 30% year- on- year. That allows us to fund this business much more economically. Again, that's flowing into the NIM. As Venkat said, in terms of a digital business, the sort of operational handling was much lower than we would have seen in our other retail businesses across the globe. We've really developed that in terms of not only digital onboarding of customers, but the way they can then interact with us subsequently. As Venkat called out, the integration of the GM credit card portfolio over the last month or so has been very successful, digitally achieved. That also helps us to take down that cost-income ratio. The cost-income ratio is now sub 50%, and we want to get it to mid-40%.
We think that's the right sort of level here. The final thing I would say is this capital efficiency part of the business. Credit cards are by definition capital-hungry businesses. How do you optimize that within the U.S. environment? We did a transaction last year with Blackstone, which was very successful, allowed us to risk transfer the assets from the portfolio. Actually, that's given us a good blend of servicing income, which is non-interest income. Clearly, we give up the NII, but as a royalty matter, it's actually enhancing to the business. Expect us to continue to pursue that kind of strategy too. Ultimately, we're confident that we're making steps, and you can see the royalty climbing quarter after quarter.
If I may, Jason, and this is purely in the spirit of scientific inquiry, one of the things I do is I collect bank accounts and credit cards just to see the user experience, how easy it is to get yourself on board and so on. I recommend you do. Get yourself a bank account at Barclays Bank in the U.S. on the app, or go and get one of our partnership co-brand cards and see how easy it is or not and form your judgment. I think you'll find it's good and easy.
Maybe shifting gears to the investment bank. Over the last 18 months, we've seen 9% CAGR revenue growth, you know, cost and capital very controlled, as you said. Markets, if you hadn't noticed, have been particularly strong this year. Maybe you talk to how sustainable is this and just how do you think about managing the cyclicality in this business.
Yeah. At a macro level, you know, the importance of the investment banks to Barclays, obviously, it's a big part of Barclays and of the U.S. cards business, is that through these two vehicles, we get great access and a great part of our business, you know, in the United States, which is still the dominant financial economy in the world, the dominant economy in the world, the dominant tech economy in the world, and the highest growth in the world of a major economy. It's really important as part of the multinational or the global bank, which we are, that while we're U.K domiciled, you know, a good 40% ish, give or take, depending on currency and market levels, of our revenues come from the U.S. The investment bank itself, I think of from both a structural point of view and a cyclical point of view.
On the market side, structurally, right, if we've said that we wanted growth in certain segmented areas, you know, we said it was in European rate, in derivatives, and securitized products. We've seen market share growth in both FICC and in equities. You saw that last quarter, and we've seen it even before that. Financing, which we call a ballast, as a percentage of market revenues, has been growing. I strongly feel it's a great business. We think we're very good at it. You manage the risks well, and it can be a very stable source of growth. For us, it's stable because we do well both in fixed income and in equities. When one part of the market is doing well, you know, we continue sustaining the other part and vice versa. The most important thing is broadening and deepening our relationship with our clients.
One of the statistics we said in markets was we want to have the top five rank. We're number six on average with the top 100 markets clients in the Barclays book. That was around 50. Now it's about 60, and it's on track to 70 by the year of next year. Increasing market share, increasing presence with our largest clients. On the investment banking side, you sort of see a similar picture. One is we laid out returns per unit for RWA, the capital efficiency, which we've achieved, in fact, overachieved in the investment bank. We've also said that we had an important role in growing our transaction bank or our corporate bank. That's been happening. Think of that corporate bank as providing a similar ballast to banking as financing does to markets. Right?
It is, again, engaging in transaction relationships with a relatively high RoTE with customers that are stable on an ongoing basis and allow you to have a cyclical part. Now, on the cyclical part, we manage the cyclicality in two ways. One, which you've already got the drift of, is reducing the relative size of the cyclicality, right, by increasing the relative size of the non-cyclical part. That's financing growing up and the corporate bank in banking growing up. The second part is managing the risk of the cyclicality better and increasing skill sets and, you know, better return per unit risk, better return per unit RWA. That's how we think we've been able to get this strategy to produce stronger results in the last six quarters, getting that 9% CAGR. I think there's more to go. I think there's more efficiency.
I think there's more growth, and there's more deepening of relationships with clients. Again, coming back to sampling, those of you here are obviously working with our investment bank, and you can judge yourself how much we are doing to make that relationship with you better and how much we are investing in it.
I think you have to do all of that whilst you are maintaining really, really good discipline in costs. One of the things that we said when we set out our strategy at the beginning was we had invested in the investment bank over a period of 2-3 years running up to February 2024, and now was the time that we started to monetize that investment. What you're seeing coming through now is several successive quarters of positive drawn. That's a really important part of this formula. Similarly, Venkat talked about the RWA discipline. I think the other thing that you see is the nimbleness of that RWA deployment across the entirety of the IB. We do think of it as one business. Clearly, banking and markets have different opportunities at different times. You've seen that come through over the last few quarters.
The last thing, as Venkat said, running risk well, one of the things that we've been reporting over the last couple of quarters is the VAR, particularly in the markets business. You can see that that VAR, if anything, on an average basis, has been coming down. We're generating these results by managing our risk well. In the second quarter, I think we had two loss days, which I think, given the volatility through the quarter, compares really well to our peers. Again, a plan of many parts.
I'm going to get in trouble if I don't ask you this, but I appreciate that we don't give interquarter guidance. Other people don't. Maybe just give us some color in terms of what activity in the investment banking you're seeing so far this quarter.
Look, I think right now, this period, especially coming into the later part of the summer, has seen a pickup in activity. You can see it in the broad numbers that are being published in Dealogic and other places. Volumes have gone up in the market. We think it's coming from a relative stability in the macroeconomic situation. Especially on tariff land, things seem to have calmed down a bit. Companies, smaller companies have been spending more time taking decisions. We see that in the corporate world. The larger companies are using this pause, using this opportunity to deal aggressively with questions about efficiency, questions about broader productivity, market footprint. Activity has picked up, and we expect it will remain sustained through this quarter and the next quarters.
Maybe shifting gears to the expense side, listening to earnings calls, there's definitely some importance on cost discipline, and we've certainly seen improvement in the efficiency ratio. Maybe just talk to what areas of focus are here in particular, and what role AI plays in changing the banking industry and improving productivity.
Shall I start and then hand? Clearly, cost is the thing that you can control most as a management team. For Venkat and myself and the rest of the ExCo and all the way through management, one of the things that we are very focused on, and it's not just about the financial consequences on the cost line, we really think about this as efficiency. You know, the other way of thinking about this is client time, it's customer time. The better your operational processes are, the lower the cost, but the better that client experience is. That's really how we think about it. If you remember this year, we're targeting a cost-income ratio of around 61%. We are at 58% at the first half, so we feel like we're on track. We've delivered GBP 350 million of this year's GBP 500 million cost savings.
That means that we've now delivered GBP 1.35 billion of the GBP 2 billion that we said we would over the three-year period. Expect us to keep going. We're very focused on not just modernizing technology, which I know Venkat will talk about, but also about streamlining our processes, really taking a customer or client lens end-to-end rather than thinking about the organization as a series of silos. 2026 is only a point in time. We do see that particularly in the investment bank and in Barclays U.K., which is our U..K. retail business, even in 2026, given the targets that we've given you, the businesses will still not be where we want them to be. They, in particular, will have more room to run beyond that stage. Venkat, do you want to talk about AI?
Yeah. Look, AI is a great opportunity. It's also something that you have to go through very carefully in order to get the value out of that opportunity. Simpler forms of AI, non-agentic, but more, you know, machine learning tools and so on, have been part of the bank toolkit for a long, long time, whether it's in fraud detection or types of risk management. What the new generation of AI or agentic AI allows you to do is, of course, do much more front-footed service of your customers and of solving problems and helping deliver products. We've been embarked on a range of very important initiatives within the bank.
One of the most important is we developed a GenAI tool to help about 16,000 of our customer service and customer-facing people, especially in the retail parts of our business, deal with customer queries, you know, in a much faster way. We're in the early stages of getting the benefits of it, and I think there's more to come. In global markets, we've started employing bots, if you'd like, to offer responses to customers, which happens sometimes 2-3 x the speed of normal customer queries. We've got, at the ground level, giving the capability to all of our colleagues, hackathons to identify ways in which you can improve the running of this bank, small and large. At the same time, what this gives us is the opportunity fundamentally to look at making the large technology investments in the bank consistent on common platforms and on next-generation platforms.
Of course, there's all the stuff you read about, you know, trying to make code development faster, trying to make even the technology delivery faster. We are at the early stages. There's a lot more to be done, but we are deeply, deeply committed to it. As a bank, you know, you can revolve around the axis of products, you revolve around the axis of customers. Increasingly, we've got to revolve around the axis of technology and AI.
I guess maybe shifting gears, we heard this morning from Comptroller of the Currency, Jonathan Gould, about just kind of what's going on in the U.S. regulatory landscape. It seems to be a lot of movement, kind of the pendulum swinging back. The U.K. has made some headlines as well. Maybe just talk to the opportunities and risks for Barclays and maybe kind of what would you like to see.
Yeah, I think the most important thing for any global bank is to have relative consistency in the regulatory approach across the countries in which you operate and relatively fair and standardized treatment of your exposures between home country and host country. That's the thing which we want. You'll never really get perfection in it, but you've got to move a lot closer than where we are. In the U.K., we welcome what the FPC is doing on its review of prudential regulation. That's the Financial Policy Committee of the Bank of England. For the Bank of England, as they have in their mandate and they said they'll do, to support both competitiveness and regulatory stability, financial stability.
We need to get to the end of Basel 3.1 ultimately, and we need it to be standardized, and we need total capital requirements to be roughly the same, which means capital plus stress testing plus any add-ons. We need this roughly to be similar between home and host countries. I hope that we get there in the next couple of years.
Got it. I don't know if there's any questions from the audience. We have a little bit of time. I guess while they're thinking, I'll go one more. Barclays is obviously a global bank. Economic performance globally is diverging. Geopolitical risks are increasing. Maybe just talk to, does it help Barclays? Hurt Barclays? Just how do you think about that?
Yeah, I mean, look, we are a global bank. We've got two big centers of our activities. One is in the U.S., the other is in the U.K. We've got a strong presence in Europe and a presence around the world in the Middle East and India, Singapore, Hong Kong, Tokyo. These are the important centers through which we are. In North America, we are here, of course, in the United States, as well as Mexico and Canada. It's important for us to, as I said, one is have a relatively harmonious regulatory relationship among all of these. I think geopolitical risks have obviously increased. It means that risk management is more important. Where you select your customers from is more important. How you operate and where you operate is important. The U.S. remains the generating force in the financial markets, the important force of economic growth.
We're very pleased with the great exposure which we have here. That's what makes us, I think, very different from many European domiciled banks. When you look at us, and I've said it when I spoke about the cards business, when I spoke about the investment bank, that is what is unique about us and I think compelling about us. Having said that, while these geopolitical differences happen, it's important that in the two home markets in which we are, those differences do not come into play. I've been very happy with the speed and the pace with which the U.K. has reached its tariff agreements with the U.S. It was very early. That President Trump will be in the U.K. next week as part of a state visit, you know, continuing to deepen those economic ties.
Many of you, I'm sure, spend your time between London and New York and, you know, relatively how seamless it is.
Questions from the audience?
Yes, this gentleman here. It's behind you.
Yeah, I wonder if I could get your thoughts. All the publicity about blockchains and stable coins and that it seems to offer, in addition to opportunities, particularly for retail, to greatly simplify international transactions. My experience as a customer in the U.K. some period ago was that transactions in the U.K. would put the U.S. banks I dealt with to shame. Transactions outside the U.K. were, A, expensive, B, complex, and whereas my U.S. credit card could be used in Europe without incurring a surcharge, my Barclays card could not, U.K. Barclays card could not be. Are there opportunities or a focus on introducing more international products to the U.K. domestic retail base?
I'll start and maybe Anna should step in. First of all, we do have cards that allow you, Barclays cards in the U.K., which allow you to spend overseas without some of those charges. Of course, not every card does that, but some cards do. I take the basic point that you're making correctly, which is I think domestic transactions in the U.K. are extremely quick, extremely sophisticated, and the apps, including our own, function very well and allow customers to do most of the things they want. I think there is a role, obviously, for some of these newer technologies when it comes to payments internationally or between different countries, you know, sort of outside the mainstream Western European or U.S. economies.
For a large bank, one of the important things is that we do this in a compliant way with people whom we know are qualified to bank with us and to receive monies from us. The KYC and AML and FinCrime elements of that are extremely important. We think over time we will adopt these technologies, but we've just got to be careful about how we do it. Anna?
Yes, I mean, there's a group of U.K. banks who are coming together. Our own CEO of the U.K. bank is sort of heading up that effort, really to look at how this technology can be deployed, not just into retail banking, but also into corporate banking. It does feel like we should be talking to you about an Avios card, so we'll catch you on the way out.
You'll get British Airways miles.
Great. On that note, please join me in thanking Venkat and Anna for their time today.
Thank you.