Wesbank

Barclays’ profit before tax up 13%

SHARE   |   Monday, 26 March 2018   |   By Kabelo Adamson
Barclays’ profit before tax up 13%

Barclays Bank Botswana has registered profit before tax of P558 million for the year ended 31 December, 2017 – representing a 13 percent increase year on year. This performance is said to be driven by a positive momentum in the bank’s key business segments that all achieved positive results despite the challenging environment. Barclays, which is one the leading financial institutions in the country, saw its income decrease by 1 percent year-on-year attributable to low economic growth and low interest rates. The central bank cut the bank rate by 50 basis points in August 2016 before taking a similar move a year later in August 2017 when it reduced by the rate by another 50 basis points to the current of 5 percent. These cuts by the central bank were meant to stimulate economic growth by reducing the cost of borrowing. The bank’s retail and business banking segments are said to have remained resilient during the period under review, but it was not the same for Corporate and Investment Banking (CIB) which was reportedly impacted by the loss of an unnamed key mining client at the end of 2016 which depressed corporate margins. During the period under review, Barclays’ interest income remained fairly flat as it registered a 1 percent decrease year-on-year, driven mainly by the impact of a margin compression due to interest rates cuts.


The bank says it however remained resilient as a business continued to drive credit growth in chosen segments of its operations. Barclays was able to accrue more fees from increased customer transactions, with its net fee and commission income increasing by 9 percent, driven by increased transactional and activity fees arising from increased customer transactional volumes in Retail and Business Banking. This is reportedly in line with Barclays’ strategy to increase the fee income contribution to the total revenue. Reduced corporate margins impacted heavily on Barclays trading activities which resulted in the decrease of the bank’s trading volumes by around 15 percent on year basis. Barclays was able to reduce its impairments by 45 percent year-on-year largely driven by an improvement in retail loan losses. The improved performance is attributable to a revised collection model; enhancements of collection strategies, continued focus on monitoring and control activities relating to debt collection. During the period under review, Barclays’ loan and advances to customers increased by 14 percent to P10.7 billion. The growth was largely driven by Corporate, Retail and Business banking segments that grew by 36 percent and 6 percent respectively. Speaking at the announcement of the banks’ performance on Thursday, Barclays Botswana Managing Director, Reinette van der Merwe said the bank’s solid performance in 2017 is a reflection of the steady progress they have made in becoming “the best financial services  provider in Botswana”. “Over the years, we have noted an upward trajectory despite the headwinds in our economic environment, and this is a course we intend to stay on through focusing on delivering what we have set ourselves to achieve in our strategy,” she told stakeholders during the briefing.


She said they have achieved these results while undergoing Barclays PLC’s shares transfer, which is one of the largest in the continent. The MD said the completion of this transaction demonstrated the confidence the market has in Barclays Africa Group Limited and its business’s ability to realize sustainable return on investment for the shareholders. Van der Merwe said the intention is to change the group holding name by June this year subject to receiving the appropriate regulatory and shareholder approval. The holding company name will change form Barclays Africa Group to Absa Group Limited and this will see the bank now trading as Absa. However, Barclays in Botswana will still retain the right to use the Barclays brand for a further two years. Van der Merwe said the new identity gives Barclays a new African identity which allows it to be the master of its own destiny, to reset its culture and redefine the course, and create a sustainable enterprise, with longevity and a sense of stewardship at its heart.