Barclays Africa Group Headline Earnings Grows by 7 Percent

By Soko Directory Team / Published July 29, 2016 | 11:50 am

The headline earnings for Barclays Africa Group have grown by 7 percent to R7.25bn (Ksh.51.91bn) supported by a strong pre-provision profit growth of 19 percent.

A report released today during the Groups half year results stated that diluted headline earnings per share of the bank have increased by 7 percent to 856.7c plus an Interim dividend per share of 460c. Headline earnings in South Africa rose by 3 percent to R5.9bn (Ksh.42.24bn) and rest of Africa rose by 33 percent to R1.3bn (Ksh.9.31bn).

The report further disclosed that Barclays Africa Group pre-provision profit increased by 19.1 percent to R17bn (Ksh.121.72bn) while revenue grew by 13 percent to R36.5bn (Ksh.261.34bn) as net interest income increased by 14 percent and noninterest income rose by 10 percent. Operating expenses on the other hand grew by 7 percent to R19.5bn (Ksh.139.62bn) while Credit impairments increased by 46 percent to R5.2bn (32.23bn) resulting in a 1.29 percent credit loss ratio up from 0.97 percent. Return on Equity is said to have declined marginally to 16.1 percent from 16.4 percent.

The released report is for the Groups’ half-year results for the period that ended in 30 June 2016, in line with market expectations. The results are said to have demonstrated Barclays Bank’s strategy which continues to deliver and is resilient to the challenging economic environment that the bank is working on.

“Our strategy continues to deliver strong results and is proving resilient in a challenging economic environment. Ours is a proudly African bank deeply committed to Shared Growth across our continent.” said Maria Ramos, the Chief Executive of Barclays Africa Group Limited.

“It is important to focus on the core underlying results as Rand weakness added 3 percent to the Group’s revenue and cost growth. Revenue grew by 13 percent while a focus on cost management saw operating costs increase only by 7 percent despite ongoing investment in new technologies, people and infrastructure,” added Ramos

According to the report, the Rest of Africa business continued to grow faster than the South Africa business. As expected, credit impairments increased due to provisions for single name impairments in the Corporate and Investment Bank, and additional coverage built in the South Africa Home Loans portfolio.

Barclays Bank’s revenue from the Rest of Africa business increased to by 23 percent of total revenues, well within the target range of 20-25 percent. Maintained top 3 status by revenue in 4 of the 5 largest markets included South Africa, Ghana, Zambia, and Botswana.

“Cost to Income ratio improved to 53.4 percent from 55.9 percent, showing good progression towards the medium-term target of the low 50s. Return on Equity (ROE) of 16.1 percent which is marginally down over the prior year in line with the groups’ guidance remains short of the medium-term target of 18- 20 percent” stated the report.

Although the results have been said to be strong, still there were a number of factors that were said to pose significant downside risks. In South Africa, business confidence remains weak, and the combination of weak job growth, higher inflation and rising interest rates have placed a strain on consumer finances. GDP growth in South Africa is expected to continue to weaken in 2016 and recover slowly in 2017. Similarly, average GDP growth in the Rest of Africa presence countries is expected to be the lowest since 2002.

Barclays Africa continues to work closely with Barclays PLC, including planning for the operational separation of the two businesses in order to preserve value for all stakeholders. Barclay Africa and Barclays PLC continue to engage with regulators as the divestment process is subject to all relevant regulatory approvals.

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