Pedestrians pass a logo outside the offices of Barclays Plc in Johannesburg, South Africa, on Thursday, Dec. 12, 2013. Inflation in Africa's biggest economy slowed for a third month in November, staying within the Reserve Bank's 3 percent to 6 percent target range and relieving pressure on Governor Gill Marcus to start raising interest rates early next year. Photographer: Dean Hutton/Bloomberg

Johannesburg - Barclays Africa’s share price reached a seven-month high of R157.30 on Friday after the company released its interims results, which showed a 7 percent increase in profit for the six months to end June.

Read also: Shrinking SA economy pinches Barclays Africa

However, by the end of the day the share price was down 0.62 percent to close at R153.49.

The group said headline earnings grew 7 percent to R7.25 billion, supported by strong pre-provision profit growth of 19 percent, while diluted headline earnings per share increased 7 percent to 856.7 cents per share.

Resilient

Chief executive Maria Ramos said: “These results demonstrate that our strategy continues to deliver and is resilient to the challenging economic environment.”

Barclays Africa’s share price has gained more than 11 percent since its parent company, Barclays, announced that it was selling its 62.3 percent stake in Barclays Africa.

The share has moved from R136.60 a share to around R155 per share on the JSE. As a result the group managed to declare a dividend of 460c per share.

The group sold 12.2 percent of their stake in an accelerated book build in the market in May. The Public Investment Corporation snapped up a 1.2 percent stake, leaving the Barclays Group with a 50.1 percent controlling stake in Barclays Africa.

Profit

In South Africa, headline earnings rose 3 percent to R5.9bn and the rest of Africa rose 33 percent to R1.3bn. The pre-provision profit increased 19.1 percent to R17bn, while revenue grew 13 percent to R36.5bn.

Barclays said rand weakness added 3 percent to the group’s revenue, cost and headline earnings growth.

Credit impairments grew 46 percent, largely due to higher charges in home loans, corporate and investment banking and retail and business banking in the rest of Africa. The non-performing loans ratio rose to 3.8 percent from 3.5 percent.

In South Africa, the group said business confidence remains weak. “The combination of weak job growth, higher inflation and rising interest rates has placed a strain on consumer finances,” it said.

Nico Smuts, an analyst at 36ONE Asset Management, said: “Barclays Africa showed healthy revenue growth, driven primarily by higher net interest margins on a steadily growing customer loan book. Cost control was commendable once again, with operating expenses growing at roughly half the rate of operating income. The rest of Africa portfolio posted a very strong performance.

Although Smuts was impressed with the group’ s performance, he also noted the rise in credit losses. “There was one major disappointment in the form of a sharp rise in credit losses. The credit cycle is worsening and Barclays Africa’s Corporate and Investment Bank appears to have been particularly exposed. The credit loss ratio in this division roughly quadrupled, mainly as a result of a single large impairment against a counterparty in the consumer sector,” he said.

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