•Strong retail and business banking push earnings
•Bank gains a million new customers in retail
•Internet banking use surges
Barclays Africa Group’s ambitious three-year strategy is said to be turning out well, group CEO Maria Ramos said on Wednesday when presenting the bank interim results for the six month period ended 30 June 2015.
The strategy, Ramos said, is based on the strength of Barclays’ franchise - an African bank that is fully locally, fully regional and fully international. The year 2015 marks the second year since the launch of the strategy which is said to be performing well having delivered a strong performance which is thought to have been driven primarily by the turnaround of Retail and Business banking.
On Wednesday Ramos announced that Barclays Africa has registered 11 percent increase in headline earnings for the six month period. The Johannesburg Stock Exchange (JSE) listed group announced that increase in headline earnings was largely due to strong growth in Retail and Business Banking (RBB).
The bank maintains that the RBB’s turnaround continues to gain momentum, with strong headline earnings growth of 17 percent to R4.7 billion, which is said to be largely due to strong operational performance led by home loans, growing customer numbers and 14 percent higher non-interest income in Business Banking.
“We gained half a million new customers in the Retail Bank. Production levels grew in selected asset classes, for example home loan production in June was the highest in June,” said Ramos.
Regarding Corporate and Investment Banking, Ramos said the sector performed well in South Africa where the group saw good deposits growth from global corporates whereas the corporate business in the rest of Africa was impacted by higher impairments and lower than anticipated loan book growth.
Despite this, Ramos said they still see a significant opportunity to grow the business outside South Africa which will be driven by the roll-out of Barclays’ integrated transactional banking platform.
Ramos emphasized the bank’s commitment when it comes to investments in digital technology and innovation and state-of-the-art branches.
“Internet banking users increased by 17 percent and usage of our banking app increased 107 percent by volume. Teller transactions declined by 21 percent with customers adopting alternative channels, in line with our strategy,” said Ramos, adding that customer satisfaction is up while complaints have gone down.
Barclays Africa, whose majority shareholder is Barclays Bank PLC, intends to continue making investments in other key African markets to accelerate growth in South Africa while remaining firmly on South Africa.
“Double digit headline earnings growth in the rest of Africa significantly outpaces growth in South Africa. We expect this trend to continue. In RBB, our focus in the rest of Africa continues to be on revenue growth and greater efficiency,” said Ramos, explaining that they are making investments in technology and innovation to improve customer experience.
Measuring the progress of their three-year strategy, Ramos said firstly they are targeting a return on equity (RoE) of 18-20 percent and for the first half of 2015 it stood at 16.4 percent when compared to the previous corresponding period. Secondly, part of the strategy is to be on the top three by revenue in the bank’s top markets in Africa and currently Barclays Africa is in the top three in South Africa, Botswana and Ghana and fourth in Kenya and Zambia.
The third part of the strategy is to improve the cost to income ratio which has so far increased marginally to 55.9 percent while the fourth commitment is for the business outside South Africa to contribute between 20 and 25 percent of overall revenue. The first six months saw revenue share increase to 20.3 percent, which Ramos said is already putting them in the target range.