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I’m gearing myself as much as purchase Barclays (LSE: BARC) shares, however one factor is holding me again. I have already got one other FTSE 100 financial institution in my SIPP, Lloyds Banking Group (LSE: LLOY). Is there any level holding each?
Proper now, the 2 have astonishing similarities. The truth is all the large UK banks do, as their shares have flown throughout the board lately.
Larger rates of interest have pushed up web curiosity margins, the distinction between what they pay savers and cost debtors. It’s a key revenue metric. Barclays and Lloyds each made a heap of cash in 2025, with pre-tax income of £9.1bn and £6.7bn, respectively. Income grew at comparable speeds too, 13% and 12%.
FTSE 100 rivals in contrast
Each introduced beneficiant share buybacks, of £1bn and £1.75bn. Share worth efficiency has been very comparable too. Final week, as buyers collect them over Iran, Barclays and Lloyds shares each climbed 6%. Over 12 months, they’re each up round 36%.
Nonetheless, Barclays has finished notably higher over three years. It’s up 180% in that point. Lloyds climbed 105%. In a approach, I’d count on that, as a result of there’s a key distinction between the 2. Lloyds is a pure play on the UK financial system. It’s targeted on home retail and business banking, with a giant publicity to mortgages and UK shoppers.
Barclays is way extra diversified. Alongside its UK operations, it has a big worldwide presence and funding banking division. Its shares are due to this fact extra uncovered to international markets and deal-making exercise. This makes it riskier, however probably extra rewarding too. Regardless of that, each have surged the identical rate of interest wave, then slowed as valuations began to look stretched and rate of interest expectations stabilised.
However following strong 2025 outcomes, each look moderately priced once more. Barclays is the cheaper at present, with a ahead price-to-earnings (P/E) ratio of simply 7.75. Lloyds is a bit pricier at 9.95. That low P/E has me itching to purchase Barclays. Then I keep in mind that it’s uncovered to the personal fairness and shadow banking market, which is beneath strain proper now. One thing I don’t have to fret about with Lloyds.
Banking inventory lookalikes
So what about earnings? Lloyds has the extra beneficiant and progressive dividend coverage, whereas Barclays prioritises buybacks. In consequence, Barclays’ trailing yield of two.21% is overwhelmed by Lloyds, which yields 3.73%. On a ahead foundation, they yield 3.5% and 4.3%, respectively. Personally, I desire dividends hitting my account, though I’m not averse to the odd buyback or two. Lloyds has additionally been energetic on that entrance.
There are such a lot of similarities. Each are delicate to financial cycles, though I’d say that Barclays is more likely to climb quicker through the good occasions, and fall quicker when the market turns. We’ve seen that these days. Barclays shares are down 15% over three months, however Lloyds shares are flat. Which can clarify that decrease Barclays P/E.
If I did purchase Barclays, it will introduce a unique mixture of dangers and really new streams. It’s not large diversification, however spreads my bets inside a sector that I like. At at present’s low valuation, I feel Barclays shares are inconceivable to withstand. It’s on the high of my Purchase record.
