Barclays FY PAT more than doubles, total income up 27 percent

Barclays FY PAT more than doubles, total income up 27 percent

HARARE, February 27 (The Source) – Barclays Bank Zimbabwe’s total income in the full year ended December 31, 2016 rose by 27 percent on the prior year to $58,3 million boosted by increases in net interest income and non-funded income.

The bank remains part of Barclays Plc after it was excluded from a deal between the parent company and South Africa’s ABSA which created Barclays Africa Group in 2013. Barclays last year announced a sell off of its African assets, including the local unit.

Profit after tax in the full year period increased by 177 percent from $3,9 million last year to $10,8 million after the bank also reduced impairment losses.

Net interest income increased by 10 percent from $16,6 million last year to $18,3 million, while non-funded income increased by 36 percent to $40 million.

Trading and investment income amounted to $7,96 million while investment securities nearly doubled to $66 million.

Treasury Bills accounted for almost 50 percent of the bank’s investment securities at $33 million, according to finance director, Samuel Matsekete.

The managing director, George Guvamatanga said they were not worried of the amount of TBs they are holding since the government is yet to default, adding that the bank would continue to prefer the security as a better alternative to loans.

“So far the government has not defaulted its treasury bill obligations and it’s very unlikely that it will,” said Guvamatanga.

Deposits increased by 67 percent from $234 million last year to $391,7 million. However, the bank reduced the amount of loans as reflected by a 28 percent decrease in loan to deposit ratio from 62 percent last year to 37 percent due to cautious lending as credit risk remains a threat.

Matsekete said they have deliberately reduced their loan book owing to the poor economic environment. Non-performing loans were largely flat at 1,6 percent compared to a market average of 7,9 percent.

“In overall terms we needed to make sure that we preserve the quality of the loan book and we don’t compromise our lending practices for the sake of scale,” said Matsekete.

Guvamatanga said the bank extended a $20 million facility to SMEs especially to those owned by youths and women.

The bank managed to contain costs in the period as reflected by a 10 percent decrease in cost to income ratio from 83 percent in the prior year to 73 percent.

Guvamatanga said the bank has reduced the amount of bank notes it imports using their nostros because of the introduction of bond notes which have eased the demand for cash.

“On a very limited basis we are still importing bank notes but not at the same levels as we use to do before the introduction of the bond notes. To an extent, the bond notes have assisted in reducing the amount of cash we needed to import,” said Guvamatanga.

“Previously we were working on an average of $15 million per week and the numbers are much less now,” he added without giving figures.

The bank has 22 percent capital adequacy ratio and a liquidity ratio of 69 percent.