Barclays Africa’s profits up 10% ahead of possible UK exit

Barclays headquarters in London. (iStock)
Barclays headquarters in London. (iStock)

Cape Town – Barclays Africa [JSE:BGA] reported a 10% increase in profit for 2015 on Tuesday, hours before the UK holding company announces whether it will exit the business.

The business that includes Absa announced that headline earnings increased 10% to R14 287m from R13 032m in its financial results ended 31 December 2015. Diluted headline earnings per share also grew 10% to R16.86 from R15.38.

It said the rest of Africa headline earnings grew 17% to R2.3bn and South Africa rose 8% to R12bn. About 80% of the bank’s profits come from South Africa.

Revenue grew 6% to R67.2bn, as net interest income increased 8% and non-interest income rose 5%, while operating expenses grew 5% to R37.7bn, it said.

Announcing the results, Barclays Africa CEO Maria Ramos said the bank gained 855 000 new-to-bank customers in 2015, according to its twitter account.

However, Barclays Africa said tough conditions in South Africa hampered its growth in the country.

“South Africa’s growth slowed under the pressure of drought, continued electricity supply challenges and falling commodity prices,” the bank said, reporting on its operating environment.

“Weak consumer confidence and rising interest rates weighed on household spending,” it added. “Economic growth is forecast to have slowed to 1.3% in 2015 from 1.5% in 2014.

“The rand lost a quarter of its value against major currencies during the year.

“Growth in the Barclays Africa Group markets in the rest of Africa moderated further due to lower commodity prices and an adverse external environment,” it added. “Fiscal and current accounts deteriorated, putting pressure on African currencies and inflation.”

UK-based Barclays PLC, which has a 62.3% stake in Barclays Africa, plans to exit its African business as part of an overhaul of the company and CEO Jes Staley will probably announce a company-wide review at 10:30 on Tuesday in London, Bloomberg reported, citing a person with knowledge of the discussions.

Barclays Africa's stocks were trading 6.1% lower on Tuesday at R136, mainly due to the pending announcement.

READ: Barclays’s threatened exit knocks confidence in SA

In a statement released on Monday, Barclays Africa said it remains committed to Africa, where it continues to be optimistic about growth prospects and expects to operate in the normal course of business.

“We continue to be optimistic about our prospects in Africa, where we have a strong franchise with assets of over R1trn,” Ramos said. “We are deeply committed to the success of our continent. Our destiny is in Africa.”

READ: Ramos defends 'deeply rooted' Barclays Africa

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