BofA Sees Risk for 'Further Cost Slippage' at Barclays; Rating, Price Objective Down

01:23 AM EDT, 09/02/2026 (MT Newswires) -- BofA Global Research flagged potential for "further cost slippage" at Barclays (BARC.L), as the research firm downgraded its rating and price objective for the British bank. "Latest guidance from H1 implies cost growth of c.4% ex acquisition in 2026, vs previous guidance of broadly stable costs. Consensus currently expects flat costs in 2027 and c.1% growth in 2028, which feels ambitious to us. While management has emphasised that most of incremental spending is investment spend with a high [return on investment], we think peers (particularly NatWest [NWG.L]) have a better track record and look to have driven more productivity improvements," according to a Tuesday note focused on UK lenders. Analysts added that they view Barclays' risk-reward profile as "more balanced" within the current market environment. "We have been positive on Barclays since Q125, as we saw potential for [return on tangible equity] expansion from (i) [self-help] measures, particularly on costs, and (ii) exposure to US capital markets, on top of structural hedge and other interest [rate-related] benefits. We also saw potential for multiple re-rating, as Barclays remains one of the most inexpensive banks in the sector," the research firm wrote. "That said, we think further upside from here is more limited, given (i) more competition in deposits in the UK, (ii) potentially higher cost pressure in 2027 and beyond (consensus expecting flat cost in 2027 and c.1% cost growth in 2028). In the near term, a higher US rate environment may also dampen fee income in the US Consumer business." Against this backdrop, BofA downgraded the stock to neutral from buy and reduced its price objective to 5.80 pounds sterling from 6.15 pounds.