by Renee Bonorchis
Barclays Africa 3 month graph
(Bloomberg) – Barclays Africa Group Ltd. said first-half profit climbed 9.8 percent after retail and business banking earnings rose, bad debts declined and it expanded African operations.
Net income rose to R6.77 billion ($539 million) in the six months through June from R6.17 billion a year earlier, Johannesburg-based Barclays Africa Group Ltd. said in a statement on Wednesday. Diluted earnings per share excluding one-time items increased 11 percent to R7.97 and the bank declared an interim dividend of R4.50 per share.
Barclays Africa, which is controlled by London-based Barclays Plc, is expanding on the continent to boost revenues from regions growing faster than many developed nations. Having lost customers as it slowed lending when bad debts jumped three years ago, it’s been investing in technology and branches to lure clients. John McFarlane, executive chairman of the parent company, supports the African growth strategy, the Johannesburg lender has said.
Barclays Africa expects its net interest margin to widen “slightly” from 2014, it said in Wednesday’s statement. The bank foresees mid-single digit loan growth, with lending in corporate and investment banking increasing faster than retail and business banking. Earnings from the rest of the continent are likely to grow faster than South Africa this year, it said.
Barclays Africa Media Release
Barclays Africa delivers strong half year performance as strategy gains momentum
Salient features
Diluted headline earnings per share (HEPS) increased 11% to 797 cents.
Declared a dividend per share (DPS) of 450 cents, up 13%.
Rest of Africa headline earnings grew 22% to R1.2bn and South Africa rose 8% to R5,5bn.
Return on equity (RoE) improved to 16,4% from 16,1%.
Pre-provision profit increased 7% to R14,3bn
Revenue grew 6% to R32,4bn, as net interest income increased 7% and non-interest income rose 4%, while operating expenses grew 5% to R18,1bn.
Credit impairments fell 1% to R3,6bn, resulting in a 1,11% credit loss ratio from 1,18%.
Barclays Africa Group Limited’s core equity tier 1 (CET 1) capital ratio of 11,7% remains above regulatory requirements and our board target range.
Barclays Africa Group Limited (‘Barclays Africa’ or ‘the Group’) today announced an 11% increase in headline earnings for the six months ended 30 June 2015 and remains firmly on track to deliver on its three year strategic priorities and market commitments.
Driven by a 7% increase in pre-provision profit to R14,3 billion, the Group’s headline earnings increased to R6,8 billion from R 6,1 billion, largely due to strong growth in Retail and Business Banking (RBB) on the back of customer growth. Barclays Africa declared an ordinary dividend per share of 450 cents, a 13% increase, given our strong capital levels and internal capital generation capacity.
Maria Ramos, Chief Executive of Barclays Africa Group Limited says: “Our growth strategy is now half way through a three year journey and these results demonstrate that it is working. We have done what we said we would by delivering a strong performance driven primarily by the turnaround of Retail and Business Banking. Through targeted growth and cost reduction, we are successfully growing in our chosen areas.”
RBB’s turnaround continues to gain momentum, with strong headline earnings growth of 17% to R4,7 billion, largely due to a strong operational performance led by Home Loans, growing customer numbers and 14% higher non-interest income in Business Banking. This was complimented by focused cost management and lower credit impairments. Our investment in digital technology, innovation and new, state-of-the-art branches is already paying dividends. The transformation of the customer experience has seen the Retail Bank gain almost half a million customers during the half, while internet banking users increased 17% and banking volumes through the Absa App more than doubled.
Excluding negative revaluations in its non-core private equity portfolio, Corporate and Investment Bank’s headline earnings grew 9%, driven by a 30% increase in Corporate earnings and 58% higher Markets earnings outside South Africa. The Corporate business outside South Africa was impacted by higher impairments and lower than anticipated loan book growth. An important driver of future growth across the continent will be the continued roll-out of Barclays.net, the Group’s integrated transactional banking platform. Forex revenues from outside South Africa exceeded those earned in South Africa for the first time.
Headline earnings from Wealth, Investment Management and Insurance (WIMI) increased 14% to R751 million driven by geographic expansion, improved short-term insurance margins and growth in fiduciary services. The business outside South Africa continues to expand with headline earnings growth of 76%. We have established additional presence in East Africa following the acquisition of First Assurance. The Wealth and Investment Management business has seen strong institutional flows with a R9 billion increase in assets under management.
We closed our Barclays Africa acquisition almost two years ago to the day. Our portfolio outside South Africa grew headline earnings 22% and 26% in constant currency (8% in SA). The revenue momentum has started to improve with 12% constant currency growth and all operations achieved positive JAWS improving the cost-to-income ratio to 60%. We expect this trend to continue and while our attention will remain firmly on South Africa, we will invest in our other key markets to accelerate the growth opportunity across the continent.
The Group’s earnings remain well diversified by business and product line. RBB accounted for 63.4% of headline earnings (excluding head office), while CIB contributed 26.4% and WIMI 10.2%.
Maria Ramos concludes: “Our strategy is based on the strength of our franchise – an African bank that is fully local, fully regional and fully international. These results demonstrate that we are on track to achieve the commitments we have made. I remain excited by the potential for our business across the continent.”
Ends
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