· Pre-provision profit increased by 10% to R32.4 billion
· Revenue increased by 8% to R72.4 billion
· Contribution from non-SA businesses increases to 23% of group revenue
· Impairments increased by 26%
Barclays Africa Group, the financial services group with operations in 12 countries in Africa, today reported a third consecutive year of earnings growth.
“The creation of the Barclays Africa Group was a crucial strategic play - it created the platform for us to develop our businesses,” said Maria Ramos, Chief Executive, Barclays Africa Group. “It has given us a significant footprint across Africa. We set out with a vision to create a proudly pan-African bank and today we can confidently say that we are a delivering on this ambition.”
A key priority since the formation of the group was stemming losses at our retail and business banking (RBB) franchise in South Africa, which remains our largest revenue generator. RBB added 2.5 million new customers over the last three years, generating strong returns.
Other priorities over the past three years included growing our corporate banking operation, which has achieved double-digit growth for the past four years; and, delivering on the opportunity we have in our Wealth, Investment Management and Insurance (WIMI) business, which is achieving an attractive 23.9% return on equity.
Barclays Africa Group’s headline earnings increased 5% to R14.9 billion in 2016 compared with 2015 as efforts to contain costs and increase efficiencies in order to invest in delivering better services to customers yielded results. Revenue increased by 8%, outpacing the 6% increase in the cost of running the business.
Slower economic growth resulted in an increase in impairments, and non-performing loans (where customers are more than three months in arrears). South Africa's economic growth is expected to have slowed to 0.4% in 2016, while growth in the Group’s presence markets in the rest of Africa slowed to 3.7%, the weakest level in more than a decade.
Credit impairments rose 26% in 2016 compared with 2015, negatively affecting the return that Barclays Africa shareholders earned on the money they invest in the business. Return on equity declined to 16.6% from 17% in 2015.
“In 2017, we expect to see modest economic recovery with South Africa’s economy estimated to grow at 1%. We expect 4.5% average GDP growth in other markets,” said Ramos.
She said, “Moderate economic growth and regulatory changes, will impact revenue growth. Positively, we expect that some of the bad debts recorded last year, won’t be repeated.”
Barclays Africa Group, which owns Absa in South Africa and the Barclays-branded businesses in the rest of Africa, as well as of the majority of NBC in Tanzania, has strong capital and liquidity levels and is independently funded.
“Barclays Africa will continue to invest for growth in Africa and with a footprint in 12 markets, is well positioned to benefit from economic growth,” said Ramos.
Barclays Africa Group Limited (“Barclays Africa” or “the Group”) is listed on the Johannesburg Stock Exchange and is one of Africa’s largest financial services groups. Barclays Africa is 50.1% owned by Barclays Bank PLC (“Barclays PLC”).
The Group operates in 12 countries with approximately 40 thousand employees, serving more than 12 million customers. It’s registered head office is in Johannesburg, South Africa and owns majority stakes in banks in Botswana, Ghana, Kenya, Mauritius, Mozambique, Seychelles, South Africa, Tanzania (Barclays Bank Tanzania and National Bank of Commerce), Uganda and Zambia. The Group also has representative offices in Namibia and Nigeria.
Barclays PLC has operations in Egypt and Zimbabwe which continue to be operated by Barclays Africa.