Bank of America stays at 'buy' on Barclays, eyes increased capital returns

Analysts at Bank of America reiterated their 'buy' recommendation and 225.0p target price for shares of Barclays, telling clients that the lender had demonstrated its balance sheet strength and its commitment to investing in the business.

Even after factoring in more investment, BoA boosted its full-year 2021 earnings estimates for Barclays by 37% in anticipation of lower impairments and stronger investment banking income.

Add to that increases in its estimates for profits in 2022 and 2023 of 4.0% and 2.0%, respectively, as a result of the £500.0m share buyback plan announced alongside its interims.

"Capital distributions through to 2023E equivalent to more than 20% of market capitalisation, improving profitability and a 20% [price-to-earnings] discount to the European Banks sector are an attractive combination and we reiterate our Buy rating," they said in a research note sent to clients.

All told, Barclays was expected to distribute £6.2bn of capital to shareholders between 2021-23, even while remaining well above its regulatory capital requirements and capital target.