Barclays Africa, which operates in countries such as Ghana, Kenya and South Africa, said on Friday that home loans’ earnings had fallen 9 percent to R764 million, largely due to 5 percent lower net interest income as loans declined 1 percent and its margin narrowed because of increased interest suspended.
Jason Quinn, the financial director at Barclays Africa, said that the group planned to accelerate the growth of its home loan market.
“Our market share is 16 percent, and we would like to reach the 20 percent level by December,” said Quinn. Normalised revenue declined by 1 percent to R36billion, given a deteriorating economic environment in South Africa, which in turn caused pre-provision profit to decline 6percent.
In South African retail banking business, Barclays Africa said headline earnings fell 10 percent to R3bn while pre-provision profits declined 7 percent, partially offset by 6 percent lower credit impairments.
Barclays Africa’s South African headline earnings grew 2 percent to R6.14bn, while the rest of Africa rose 19 percent to R1.469bn to account for 19 percent of group earnings from 17 percent.
Quinn said the numbers were in line with expectations.
“We set out a fairly cautious outlook. In the guidance we said that given to the low economic backdrop, we thought our margins would come down, and that’s what played out. The macro-economic backdrop has deteriorated even further.”
Quinn said investor confidence in South Africa had a negative impact on the group.
“There is a consequence of confidence, whether it is a home loan or big corporates that are holding back on spending. In addition the rand was strong in the first half of this year, compared to last year, and that is not good when you translate earnings in our other markets,” he said.
Quinn also said the company was also impacted by regulatory issues in South Africa and Kenya.
Meanwhile South African Reserve Bank governor Lesetja Kganyago earlier this month said that the repo rate would be cut by 25 basis points to 6.75 percent.
Quinn said the move was the first cut in a shallow cycle. “We do not expect any cuts. We think that we may have the next cut in September or early next year. He believed the cut was modest.
“It will provide relief for consumers and allow them to deal with their debt. We do not think that it changes the risk of bad debt or the current credit outlook,” he said.
“We are presenting a set of results that demonstrate the real value of the 2013 acquisition of the Barclays businesses in Africa,” chief executive Maria Ramos said.
Barclays Africa shares declined 2.16 percent on the JSE on Friday to close at R143.93.