Barclays Africa Group announced a 7% rise in its half-year profit, driven by strong earnings growth in local markets and Africa – despite the economic downturn.<\/p>\n
Impairments declined by 27% from a high base in the first half of 2016, contributing to the improvement in earnings.<\/p>\n
The group’s South African banking headline earnings grew 6% to R6 billion, while the rest of it’s African banking rose 19% to R1.5 billion, it said in a shareholder statement released on Friday.<\/p>\n
Retail banking fell 10% to R3.1 billion, while business banking decreased 5% to R1.1 billion. Corporate and investment banking\u00a0 grew 76%, given 81% lower credit impairments. Corporate rose 35% to R558 million and investment banking increased 105% to R1.2 billion.<\/p>\n
The group declared a 3% higher interim dividend per share of 475 cents.<\/p>\n
The announcement marked the first time that the company reported results following Barclays PLC\u2019s sell-down of its majority stake in the African business in a share sale that saw exceptionally strong interest for the stock.<\/p>\n
\u201cWe are presenting a set of results that demonstrate the real value of the 2013 acquisition of the Barclays businesses in Africa,\u201d said Maria Ramos, chief executive, Barclays Africa. \u201cBoth geographically, as well as by customer segment, they are proving their worth in yielding a strong performance for the first half, even as our biggest market, South Africa, has suffered the impact of an economic downturn.\u201d<\/p>\n
The group noted a tough trading environment with South Africa\u2019s economy shrinking by 0,7% in the first quarter, pulling the economy into recession.<\/p>\n
“This was added to by credit rating agencies downgraded South Africa\u2019s sovereign ratings in response to this economic slowdown, concerns over governance and financial performance in state-owned enterprises, and greater uncertainty in economic policy,” it said.<\/p>\n
“Household incomes are under pressure, with a poor job market and weak consumer confidence contributing to weak underlying demand. Business sector surveys continue to point to very weak confidence and a concern over the lack of clarity on economic policy.”<\/p>\n
Group revenue declined 1% to R36 billion, given the deteriorating economic environment in South Africa, which in turn caused pre-provision profit to decline 6%. The cost-to-income ratio increased to 55.6% despite a focus on cost containment and inflationary cost growth. The return on equity remained attractive and improved to 16.8% from 16.1%, the lender said.<\/p>\n
The group said it continues to have a sound financial position with balance sheet assets of R1.1 trillion and strong capital adequacy and liquidity reserve positions.<\/p>\n
“Successful separation from Barclays PLC will be an overarching priority for Barclays Africa over the next three years,” it said.<\/p>\n
The bak said that for the remainder of the year, Barclays Africa will place priority focus on its retail and business bank performance in South Africa and on driving opportunities in its businesses outside of South Africa.<\/p>\n
Barclays Africa is also continuing its significant investment in technology to build a more efficient and lower-cost franchise.<\/p>\n
\u201cOur results today are testament to the resilience of our business and the momentum we are creating,\u201d Ramos said. \u201cWe expect the economic environment to remain challenging but we believe the long-term opportunities remain attractive.\u201d<\/p>\n
Looking forward, Ramos said: \u201cThis is an exciting time for us and I have said that our ambition remains the same and undiminished. We are building a pan-African financial services business with the potential to unlock the real opportunities and competitive advantages we enjoy.<\/p>\n