Friday, April 12, 2024

Barclays Africa profit growth slows as SA economy sinks

Barclays Africa Group Ltd on Friday reported a 7 percent rise in half-year profit, a slower growth rate as neighbouring South Africa’s economy continues to sink. 

The group’s financial results for the first half of 2016 which were made public on Friday shows that its headline earnings in South Africa rose 3 percent to R5.9 billion and the rest of Africa rose 33 percent to R1.3 billion.  

Barclays Africa Group Deputy Chief Executive David Hodnett told Sunday Standard on Friday that the group is facing difficult trading conditions which vary with each country across the African region. 

Sluggish economic growth in most countries where Barclays Africa has operations continues to weigh heavily on the bank’s profitability. 

“For Botswana and Zambia there is uncertainty over commodities while South Africa the economy is expected to register zero growth”, Hodnett said Friday. 

South Africa, business confidence remains weak, and the combination of weak job growth, higher inflation and rising interest rates have placed a strain on consumer finances. GDP growth in South Africa is expected to continue to weaken in 2016 and recover slowly in 2017. Similarly, average GDP growth in the Rest of Africa presence countries is expected to be the lowest since 2002.

In Botswana the International Monetary Fund (IMF) has projected that the domestic economy will expand by 3.7 percent in 2016 compared to an estimated 0.3 percent contraction in 2015. The IMF says Botswana will experience a gradual economic recovery in the next three years, based on an expected gradual increase in diamond prices and fiscal stimulus.

After a rapid recovery from the 2009 downturn, Botswana’s GDP growth is estimated to have turned slightly negative in 2015 owing to a decline in global demand for diamonds and copper. At the same time, non-mining activities, while recording positive growth over the year, remained subdued owing to spillovers from lower mining activity, a regional drought, and electricity and water shortages.

Meanwhile following their announcement on 1 March, Barclays PLC says it continues to explore strategic and capital market opportunities to reduce its shareholding in Barclays Africa to achieve regulatory deconsolidation. 

“The first sale tranche of 12.2% was successfully concluded on 5 May and reduced Barclays PLC’s shareholding to 50.1%. Barclays Africa continues to work closely with Barclays PLC, including planning for the operational separation of the two businesses in order to preserve value for all stakeholders.”


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