Barclays Bank of Kenya Ltd, on May 29 announced a profit before tax of 2.9 billion shillings for the period ended 31 March 2019, despite incurring a one-off cost of 243 million shillings in the ongoing separation from Barclays Plc and the related brand and name change initiatives.
The incurred costs took a toll on Barclays Bank Kenya’s profits as the lender transition to the Absa brand, which is set to be fully adopted by June 2020 following Barclays Africa move to change its name to Absa Group after severing ties with Barclays.
The previous financials also saw the Kenyan outfit incur a transition cost of 270 million shillings for the year ended December 31, 2018, with attributions to customer awareness.
Nevertheless, this year’s profits present growth of 12 percent compared to a similar period last year.
Over 2016 & 2017, Barclays Plc reduced its shareholding in Absa Group Limited from 62.3 percent to 14.9 percent.
A comprehensive transition program was then set up to manage the separation of systems and capabilities from Barclays Plc.
According to the lender, the separation program is expected to transform it into a more scalable and digitally-led bank.
In addition, the separation program is set to consolidate and digitize core technology services in a move that will significantly improve their existing solutions and enhance service delivery to our customers.
“We also have a project team dedicated to the successful delivery of the Separation and Re-Branding program. The program is guided by robust governance structures and a Steering Committee of senior experienced executives. This will ensure a seamless and effective separation from Barclays Plc to Absa,” read a statement from Barclays.
Barclays Bank’s separation program in 2019 will feature immense investments and implementation of over 70 technology-specific projects, which will further eliminate service dependency on Barclays Plc and move the bank to superior efficient, robust and customer-centric systems.
So far, all technology changes achieved so far have been implemented with minimal impacts on customers.
“We intend to keep all our stakeholders informed and engaged through various activities and brand awareness initiatives throughout the year. Overall, 2019 is critical for the Separation program, with multiple critical projects set for delivery,” said Jeremy Awori, Barclays Kenya Chief Executive Office.
The bank has made tremendous strides in terms of engagement with the customers and society through several activities.
Earlier in 2019, Absa Group sponsored the Magical Kenya Open Golf Tournament, which was part of the prestigious European Tour. The sponsorship had a massive positive impact on the development of professional golf in Kenya.
Also, as part of the Bank’s effort to inform customers about the Absa brand, Barclays has launched communication campaign that showcases the credentials of the Absa brand and the positive impact it has made on the African continent.
The bank is committed to intensifying customer engagement activities as it inches closer to the launch date.
Principals of Normalization During the Separation Period
Notably, the separation from Barclays Plc will still have an impact on Barclays Kenya’s financial results over the next 2 years.
The bank has adopted the normalization concept to show the underlying performance after adjusting for one-off separation costs.
The costs encompass a substantial change in spending as the bank invests in systems required to be separated, the transitional service agreements costs Absa pays to Barclays Plc for the provision of various services during the separation period together with the costs to be incurred for rebranding.
“In this quarter, we have reported separation costs of 243 million shillings; which are an exceptional item and will be incurred throughout the separation period,” said Mr. Awori.
He concluded that the Bank has started 2019 with strong momentum and a positive outlook as it remains committed to delivering exceptional customer experience and shareholder value as it lives its purpose of bringing the possibility to life.