Barclays (LSE:BARC) shares have delivered impressive returns over the past year. Despite a difficult start to 2026,… FTSE 100 index The bank’s value has risen by 38% over the past year. This is much better than the broader index’s 22% increase.

To put that in context, someone who bought 1,001 shares in the company 12 months ago would have seen the value of their investment rise to £4,310 from £3,114. With the dividend, they would have enjoyed a total return of 41%, or around £1,281.

The question is: Can Barclays’ share price continue its heroic rise? I have my doubts…

Are Barclays shares expensive?

The problem – as is often the case with stocks that are rising in value – is that the bank is now demanding a valuation that is too high. Some stocks deserve an excellent rating, for example, if they have impressive earnings potential.

This is not a category Barclays falls into in my book. In fact, given the enormous challenges it faces (more on this later), I think its shares look seriously overvalued.

At 410p per share, the bank’s price-to-book ratio is 1.1. This is hardly formidable at first glance. However, it is more than double the Barclays 10-year average of 0.5. With interest rates falling towards more historic levels, this leaves the Barclays share price at risk, in my opinion.

What could go wrong?

As you can see, retail banks struggled to increase their profits in the wake of the 2008 financial collapse. A prolonged period of low interest rates affected net interest margins, which measure the difference between the interest they pay to savers and what they charge to borrowers.

Inflation has risen in the wake of the COVID-19 pandemic, leading to higher interest rates. But easing inflationary pressures have prompted the Bank of England to lower its lending benchmark, and further cuts are likely, with policymakers also tipped to move to stimulate the faltering economy. This would drag banks’ already weak interest margins to lower levels (Barclays’ UK margin was 3.6% as of December), and closer to those of the 2000s when banks struggled to generate any meaningful growth.

The possibility of weak economic growth in itself represents a major challenge for banks. Will they be able to achieve enough loan growth to increase profits? Could they also see impairment charges rise sharply if borrowers start defaulting on their repayments?

Finally, traditional high street operators face the difficult task of increasing their profits as challenger banks grow in influence. These newer banks have lower costs, which allows them to offer more attractive products. Many like Monzo are raising capital to ramp up their attacks and expand into new product areas, increasing pressure on existing banks.

This is what I do

I’m not saying Barclays is a lame duck. It has great brand strength, which can support profits even if market conditions worsen or competition increases. The sprawling investment bank also leaves it in a better place than its high street rivals like it to be Lloyd’s.

But do the risks outweigh the potential benefits of buying Barclays shares? I think so, especially at current prices. That’s why I look for other FTSE 100 stocks to buy instead.