Home » News » Business » Barclays records P 260 million profits

Barclays records P 260 million profits

Publishing Date : 10 September, 2018


Barclays Bank of Botswana announced its financial results for the half year six month ended 30 June 2018, recording P260 million profit before tax mirroring a 4 percent growth year-on-year compared to the half year period ended June 2018.

When briefing its stakeholders and members of the media in Gaborone on Thursday morning, Barclays top brass observed that the performance attributable to growth in income, well contained costs as well as favourable credit losses. Deliberating on the financial figures Barclays Finance Director Mumba Kalifungwa said on a gross basis, interest income went up by 4 percent year-on-year despite the interest rate cut of 50bps in the last quarter of 2017.

Mumba, however highlighted that an increase in the interest cost of funding driven by market trends diluted Net interest income growth in the bank‘s net interest income resulting in flat figures year on year. Barclays further revealed a satisfactory net and commission income increase of 10 percent year –on –year during the period under review. “This is on the back of our focus on driving innovation through investment and enhancement of our digital channels,” explained Finance Director Mumba Kalifungwa.

The Botswana Stock Exchange Limited (BSEL) listed banking outfit registered a 18 percent hike on net trading income attributable to increase in forex sales volumes. Kalifungwa noted that the bank’s continued focus on client acquisition and penetration had a positive impact on the net trading income growth.  “Operating costs were well contained with business achieving a cost to income ratio of 54 percent which is in line with our strategic target of lower 50 s. Year on year costs grew by 6 percent ,largely driven by an increase in technology spend as part of the separation journey from Barclays PLC,” he said.

Barclays Finance chief also revealed that the bank was currently coming up with ways to manage and contain expenses.  “We continue to exploit cost saving opportunities through a review in all our cost lines and various supplier contracts in order to identify opportunities for savings,” he said.

With regards to the new accounting standards IFRS 9 which was introduced beginning of January this year to replace the old IAS 39 Financial tool, Barclays says so far the new standards bring in a revised impairment model which requires entities to recognize expected credit losses based on unbiased forward-looking information.

“This replaces the existing IAS 39 incurred loss model which only recognizes impairment if there is objective evidence that a loss was already incurred and measured the loss on the most probable outcome, The day 1 impact of this change that was charged to our Retained earnings on the balance sheet amounted to an after tax amount of P129 million,” explained Mumba. Despite the more stringent accounting for the credit losses Barclays’s expected credit losses/impairments decreased by 12.3 percent in comparison to the prior period.

According to Finance Head the performance is predominantly due to enhanced collections capability and conservative credit extension to high risk sectors especially in the retail segment. Barclays outgoing Managing Director Reinette van der Merwe told  stakeholders that the bank ‘s first 2018 half year results  mirrored  resilience as  the business  continues to operate in a highly competitive  and modest local banking environment.

“This result were realized in the midst of various external challenges such as the declining credit growth across the sector, low interest rates and a general recovery commodity prices, this did not deter us from our ambition to be the leading financial services partner in Botswana,” she said. Van der Merwe noted that Barclays continues to make progress in supporting key segments in various sectors of the economy.

 “We are excited to be part of a financial services group that Africa can be proud of, the transition from Barclays Group to Absa brand present a more modern, fast thinking and relevant organization that is truly an African bank that is for the people,” she said.
Barclay’s balance sheet grew by 12 percent ending the half year period at 16.9 billion pula.  According to bank Finance Boss the expansion was influenced by loans and advances to customers which increased by 14 percent year –on –year to 11.4 billion pula.

 “The growth was fairly distributed across the segments in line with our strategy and continues to be focuses around prudent lending in our chosen business segments,” he said. Customer liabilities increased by 6 percent year on year driven by continued customer focus and penetration across all segments. Mumba noted that the growth compares favourably against the banking industry growth of 4 percent year –on –year.

“ We continue to strive to providing world-class customer services and products to existing and potential customers with a view to providing access to finance and various payment solutions, to this end we continue to focus on way of optimizing our balance sheet and the resultant funding sources” reiterated Kalifungwa. He added that given Barclays‘s strong profitability the bank’s return on equity remains solid at 22 percent  and compares favourably against the banking industry average of 16.7 percent .

“Our regulatory capital position stood at 2 billion pula representing a ration of 19.4 percent against the regulatory minimum requirement of 15 percent, this is testament to how our balance sheet continues to remain prudently positioned with strong liquidity and capital levels, and sound provisioning for expected credit losses,” he said. The bank announced a proposed interim dividend payout of P80 million at 9.38 thebe per share subject to regulatory approval.

Barclays MD noted that in light of continued modest growth in household income as well as restrained economic expansion the bank remains mindful of challenges which call for continued caution while exploring opportunities within chosen segments. She added that the recently declared economic recession in South Africa posts possible challenges that will require close monitoring of expenditure and banking systems to remain operational with strong capital levels and internal capital generation capacity, she however observed that anticipated increased government spending sparks confidence as its likely to open new business opportunities in the market as well as increase house hold spending. “We are committed to deliver on our strategy and through endurance and tenacity, we remain optimistic of the future,” she said.



Do you think the courts will help put the UDC, BMD impasse within reasonable time ahead of the 2019 General Election?