110214 Barclays Chief Executive Maria Ramos after the company financial results that was held in Sandton,Johannesburg.photo by Simphiwe Mbokazi 3

Johannesburg - A substantial drop in impairments on loans and advances, following previous years’ tightening of credit granting criteria, enabled Barclays Africa Group to report a 14 percent increase in headline earnings a share to R13.98 for the year to December last year, the bank said yesterday.

Return on equity increased to 15.5 percent from 14.1 percent and the group declared a final dividend of R4.70 a share for a full-year ordinary dividend payout of R8.20. During the year the group paid a special dividend of R7.08 a share.

The full-year results are the first since the completion of the merger between Absa and the bulk of Barclays’ African operations to form Barclays Africa Group.

Commenting on the results at a presentation yesterday, group chief executive Maria Ramos said: “We met our key commitments to the market with improved credit quality and robust cost containment, although revenue growth remained challenging. The Barclays Africa deal gives us access to market with good growth prospects and I’m confident that we have the right strategy in place to capture this opportunity.”

Ramos said the steps that had been taken in recent years to “de-risk” the business by tightening credit granting criteria meant the local business was in a strong position as it headed into an increasing interest rate environment.

The group’s key objectives for the next three years include to be in the top three banks by revenue in South Africa and in its four largest markets outside South Africa – namely Ghana, Botswana, Zambia and Kenya; increase its return on equity to between 18 percent and 20 percent; reduce its cost to income ratio to the low 50s from 56.3 percent; and increase the share of revenue from outside South Africa to between 20 percent and 25 percent.

Commenting after the results presentation on speculation about her possible move from the bank, Ramos said: “I am fully committed to delivering on the targets and commitments we have made to the board and which we outlined as part of our full-year results… I am committed to staying the course and I will continue to serve as chief executive for as long as the board so wishes.”

Group revenue grew 8 percent to R59.4 billion and the pre-provision profit increased 5 percent to R26bn.

A substantial 65 percent reduction in home loan impairments was the major factor behind the 22 percent drop in impairments at the group’s local retail banking division, which enabled it to increase its earnings 36 percent to R4.9bn. At business banking headline earnings increased 64 percent to R1.7bn.

The improved performance at the group’s retail banking division saw bonus costs at Barclays Africa increase by 39 percent to R1.7bn. Management explained that the increased bonuses were “mainly driven by the recovery in performance of the retail banking segment after the reduction in bonuses in the previous reporting period and foreign exchange transactions”.

Looking ahead, the board expects mid-single-digit loan growth in South Africa this year.

The shares gained 2.77 percent to R127.50 yesterday. - Business Report