030809 ABSA Group CEO Maria Ramos at the company result held in Sandton.photo by Simphiwe Mbokazi 312

Johannesburg - Barclays Africa, the lender that’s being sold by its London-based parent, said first-half profit rose 3.7 percent, a slower pace than last year, after credit impairments and non-performing loans increased and South Africa’s economy shrank.

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Net income climbed to R7.02 billion ($497 million) in the six months through June from 6.77 billion rand a year earlier, Johannesburg-based Barclays Africa said in a statement on Friday.

Earnings per share excluding one-time items increased 7 percent to R8.57, beating the R8.44 median estimate of four analysts surveyed by Bloomberg. The bank declared an increased interim dividend of R4.60 per share.

Barclays Africa is focusing on managing its expenses to cope with a South African economy tipping toward a recession and the risk of a credit-rating downgrade to junk by the end of the year.

Barclays said in March it’s selling its controlling stake in the South African lender, which has operations in 12 countries across the continent, because of regulations that make it too expensive to hold all the shares.

“We expect low to mid-single digit loan growth, with corporate and investment banking growing faster than retail and business banking and the rest of Africa growth exceeding South Africa,” Barclays Africa said. “Continued focus on revenue growth and cost management should improve the group’s cost-to-income ratio.”

The credit-loss ratio should improve from the first half, while return on equity is likely to be slightly lower in 2016 after falling to 16.1 percent in the first six months, the lender said. Credit impairments increased 46 percent in the first half to R5.2 billion.

“Barclays continues to explore strategic and capital market options to reduce its shareholding in Barclays Africa,” the company said, without giving more detail.

Bloomberg