Barclays‘ (LSE: BARC) share price dipped following the publication of its 2024 outcomes on Thursday (13 February), however the numbers look pretty good to me.

With the inventory nonetheless buying and selling effectively beneath its e book worth, ought to buyers contemplate shopping for the dip?

Strong outcomes present help

Barclays’ pre-tax revenue rose by 24% to £8,108m final yr, barely above dealer forecasts. Shareholders get a 5% dividend improve and have additionally benefited from £1.8bn of share buybacks during the last yr.

I’m not at all times a fan of buybacks, however Barclays has been shopping for again its shares beneath their e book worth. For a wholesome enterprise, this may be good option to increase the share price. Having fewer shares in circulation will increase an organization’s e book worth per share, which may drive share price positive factors.

Barclays’ tangible e book worth per share rose by 8% to 357p final yr. That’s greater than 20% above the share price, on the time of writing. Chief government CS Venkatakrishnan is planning extra buybacks for 2025 too.

What to fret about

One space that’s inflicting some stress for UK lenders for the time being is motor finance – used automobile loans. Barclays stopped working on this space in 2019, however the financial institution admits that “historical operations before this time” may very well be affected.

The UK regulator’s investigation into this sector is ongoing and nobody is aware of what the result will likely be. However rival Lloyds (a a lot larger motor sector lender) has already put aside £450m.

One other threat is the long-term volatility of earnings from the group’s funding financial institution. This division’s performing effectively for the time being, as deal exercise recovers. Earnings rose by 18% to £3.8bn final yr –practically half the group whole. However funding banking tends to undergo weak patches periodically.

My verdict

I’m inspired by what I’m seeing at Barclays. Most significantly, I’m glad to see the financial institution’s all-important profitability metrics are bettering.

Return on tangible fairness (RoTE) rose to 10.5%, from 9% in 2023. Administration’s focusing on a RoTE determine of 11% for 2025 and “greater than 12%” for 2026.

That is necessary as a result of it’s in all probability the most effective measure of how a lot surplus money a financial institution’s producing every year. All else being equal, larger returns on fairness imply a financial institution will have the ability to make investments extra in progress or fund bigger shareholder returns.

We will see the influence of this by taking a look at Barclays’ CET1 ratio, which is a regulatory measure of surplus capital. Regardless of returning £3bn of capital via buybacks and dividends, the financial institution’s CET1 ratio was nearly unchanged at 13.6%, versus 13.8% a yr earlier.

If Barclays can proceed to hit its profitability targets, I believe the shares ought to commerce nearer to their e book worth over time. Even perhaps above it. As I write, the shares are buying and selling practically 20% beneath their e book worth of 357p, on a 2025 forecast price-to-earnings (P/E) ratio of seven. There’s additionally a 3.2% dividend yield.

Barclays nonetheless appears to be like first rate worth to me, and I’m reassured by the financial institution’s newest outcomes. I believe the shares are value contemplating as a long-term purchase.