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Barclays Reports Stellar Results

 

-          Profit Before Tax of P494 million

 

-          Impairments increase year-on-year

 

-          Staff costs hurt operating expenses

 

 

The Barclays Bank Botswana delivered excellent results despite severe economic disruptions such as the slowing economic growth and a general slow rebound in commodity prices. The Bank continued to make progress in growing the key business segments in various sectors of the economy.

The Bank achieved a 49% growth in Profit Before Tax in comparison to the year ended 31 December 2015, growing from P332 million to P494 million. This strong performance was mainly driven by sustained revenue growth in Retail and Business Banking (RBB) segments which grew by 11%, as well as significant growth of 30% in the Corporate and Investment Banking (CIB) segment.

Barclays Bank of Botswana declared a final dividend of 14.669 thebe per share subject to regulatory approval for the year ending 31 December 2016, after considering its capital levels and internal capital generation capacity.

Reinette van der Merwe, Managing Director of Barclays Bank of Botswana said, ‘Our performance reflects the commitment of our colleagues and all our stakeholders. We believe that as we continue our journey to foster comprehensive, cutting-edge financial solutions, we ultimately simplify and improve the customer experience, achieving our goal to be the “Bank of Choice” in Botswana.’

Net interest income increased by 9% year-on-year, mainly driven by balance sheet growth and optimal utilisation of funding sources, which resulted in net reduction in our interest cost year- on-year by 26%.

Net fee and commission income increased by 16% year-on-year. This growth was driven mainly from our RBB segment where we had an increase in transactional volumes and activity.

Reinette van der Merwe, Managing Director of Barclays Bank of Botswana said, ‘Our performance reflects the commitment of our colleagues and all our stakeholders. We believe that as we continue our journey to foster comprehensive, cutting-edge financial solutions, we ultimately simplify and improve the customer experience, achieving our goal to be the “Bank of Choice” in Botswana.’et interest income increased by 9% year-on-year, mainly driven by balance sheet growth and optimal utilisation of funding sources, which resulted in net reduction in our interest cost year- on-year by 26%.

Net fee and commission income increased by 16% year-on-year. This growth was driven mainly from our RBB segment where we had an increase in transactional volumes and activity from our various digital channels.

Net trading income increased by 70% year-on-year. This growth was driven by increased volumes from client acquisition and execution of cross selling opportunities, during the year.

Operating costs have remained well contained with a cost-to-income ratio of 49% for the current year, compared to 55% in the previous year.

“This is in line with our continued focus of managing costs through various cost control programmes and rationalisation activities, while continuing to invest in our people and systems,” said Reinette van der Merwe.

 

On a year-on-year basis impairments grew by a modest 7% in comparison to the prior year. This positive performance is attributable to Barclays enhanced collections capability and selective credit extension to high risk sectors.

During the year, management took a prudent view to accelerate recognition of Retail impairments provisions related to personal loans of employees of one of our mining clients. Excluding the impact of this significant event, our impairments would have reduced 50% year-on-year.

Consequently on a normalised basis our overall loan loss rate would have been at 1.2% from the previous year’s levels of 2.4%. Due to accelerating impairments provisions, our impairment loss rate is 2.7% compared to 2.4% in the prior year.

“As we continue to focus on delivering on our strategy, we were able to realise a 5% growth in our overall balance sheet. The major components of our balance sheet remained largely unchanged, with customer loans and liabilities representing the most significant parts,” said Reinette van der Merwe.

Loans and advances to customers decreased 4% year-on-year. This decrease was mainly driven by the early settlement of a loan facility by one of our mining clients. Therefore, on a normalised view, our customer assets grew by 3% year-on-year. Deposits due to customers increased by 2%, largely driven by positive flows from our CIB segment that drives a significant portion of our funding.

Barclays regulatory capital position is P1.9 billion at financial year end, representing a ratio of 19.8% against the regulatory minimum of 15%. The Bank remains well capitalised to support future balance sheet growth and will continue to review its capital position in line with capital demand and regulatory changes.

Reinette van der Merwe concludes: “We are determined to attain a leading market position in various sectors, in full support of our customers and all other stakeholders countrywide. With financial and business power to invest in future growth, Barclays Bank of Botswana is ready to seize the opportunity that will support the long term strength of our business.”

 

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