2025 is off to a strong start for UK investors. The FTSE 100 index is sitting just shy of a new all-time high, beating the record set last May.

At face value, this is puzzling. Many experts are forecasting sluggish growth for the UK economy and borrowing costs are at a 10-year high. Government spending is under the microscope with concerns it will keep inflation higher for longer.

However, the weaker British currency benefits multinationals that earn much of their money in the US, and investors continue to pile money into equities. This has helped keep UK stocks buoyant despite the general doom and gloom.

Amid this turbulent start to the year, the UK large-cap index has climbed 5.4% in the past month to 8,542 points as I write on Thursday (23 January). And among the many high performers, there’s one FTSE 100 banking stock that has really caught my eye.

Strong start to the year

The Barclays (LSE: BARC) share price has gone from strength to strength in recent times. It has more than doubled in the past year to £2.94 per share as of today. This is seriously impressive growth in a short space of time and it has propelled the company’s market cap to over £40bn.

Chief executive CS Venkatakrishnan has proven popular with investors since taking the reins in late 2021, with a promise to return £10bn to shareholders via share buybacks and dividends over the next three years.

An 18% increase in third-quarter 2024 pre-tax profits to £2.2bn exceeded analysts expectations with strong investment banking performance providing a boost. All of that as Venkatakrishnan aims to deliver on his promise to reduce the relative size of the more volatile trading and investment banking division.

Higher borrowing costs could also potentially help the bank as it looks to boost its net interest income(NII). This is essentially the difference between the bank’s interest earned on assets and interest paid to customers. Resilience in bank loan books alongside higher interest rates has helped boost Barclays and other bank’s valuations in 2025.

Valuation

So, it’s clear that the Barclays share price has been on a run lately. How does that compare to its UK banking peers?

The NatWest share price has climbed 95.7% in the last 12 months to £4.18, while HSBC shares are up 37% to £8.22 over the same period.

That leads me to relative value. Barclays looks good value at first glance with a price-to-book (P/B) ratio of 0.6. That compares favourably to both NatWest and HSBC at 0.9 and 1.0, respectively.

However, P/B ratios aren’t the only metric to consider. The bank’s 2% dividend yield lags behind NatWest’s figure of 2.9%, while a price-to-earnings (P/E) ratio of 11.8 is well above the 8.7 that both NatWest and HSBC are trading at right now.

Will I consider buying?

Barclays isn’t a stock that I’m looking to buy right now. The bank’s relative value to peers is mixed and there’s a strategic transformation under way to turn around its profitability.

There’s no doubt the recent share price run has been impressive but I’m not sure it will continue. I’ll be focusing my attention on more defensive sectors within the Footsie, like pharmaceuticals, for the time being.