Barclays Africa Group’s first-half profit climbed 10 percent after investment banking earnings increased and credit impairments fell, the JSE-listed African unit of Britain’s Barclays said yesterday.
Headline earnings increased to R6.1 billion in the six months to June from a restated R5.6bn a year earlier, Barclays Africa said. Headline earnings a share increased by the same margin to R7.21.
Profit from investment banking jumped 30 percent to R1.1bn, led by an increase in fixed income and credit and the South African bank’s business in the rest of the continent.
That contrasted with a 50 percent plunge in investment banking earnings at London-based Barclays, which owns 62.3 percent of the South African lender. Barclays has said the company was placing more focus on its African unit, which is exempt from a plan to cut a quarter of employees at its investment bank.
“Investing in corporate banking across the continent is paying dividends,” Barclays Africa chief executive Maria Ramos said. “Growth outside of South Africa has been strong and this portfolio now constitutes 20 percent of group revenue, which is already within the range we have set as a target for 2016.”
Barclays Africa bought most of its UK parent’s African operations for R18.3bn last year to boost earnings. Owning its parent’s operations in Egypt and Zimbabwe “remains an ambition for us”, Ramos said, noting that expansion in Nigeria was also still a goal.
In its home market, where it trades as Absa, Barclays Africa is spending money to refurbish branches, install cash machines and upgrade technology after South Africa’s third-biggest lender lost clients to competitors. Customer numbers at Absa fell 7 percent to 9.2 million this year, it said.
Barclays Africa shares closed 1.86 percent lower at R169.10 on the JSE.
The stock has climbed 29 percent this year, the best performer on the seven-member FTSE/JSE Africa banks index, which has gained 19 percent over the period.
“We expect stronger growth in the Barclays Africa Group markets beyond South Africa, despite fiscal and external account challenges in some of the larger economies,” the banking group said.
“We expect mid-single digit loan growth in South Africa this year. Our net interest margin should widen, given rising interest rates in South Africa, while our credit-loss ratio is also likely to improve slightly.”
The company declared an interim dividend of R4 a share.
Barclays, the UK’s second-largest bank by assets, returned to a profit in the second quarter, helped by lower provisions and cost cuts.
However, earnings at its investment bank, which is being downsized, slumped to £567 million (R10.2bn) as the company made less money from equities and currencies. – Bloomberg