Barclays Africa Group Limited (Barclays Africa) is optimistic that it is on track to deliver on the ambitious targets laid out at its annual results in February.
The Group’s financial results for the six months ended 30 June 2014 reflect a 10 percent increase in headline earnings to R6,1 billion underpinned by strong financial momentum across the business, despite a contraction in South Africa’s GDP in the first quarter of this year.
The bank has revealed that growth in Barclays Africa’s markets outside South Africa remained resilient, notwithstanding a slowdown in key economies such as Ghana and Zambia.
Announcing the results on Wednesday, Barclays Africa Group Limited Chief Executive,┬áMaria Ramos believes that as a bank, they have taken the time to develop the right strategy for Barclays Africa and have been very clear that this would take three years to deliver.
Ramos pointed out that the results for the first six months of the year demonstrate the traction they are gaining in executing on the strategy and how well they are progressing towards realising their ambitions on the continent.
“We are transforming the business in the right areas by executing on our four strategic priorities and are determined to accelerate our momentum even faster,” she said.
┬áRamos highlighted that in February, Barclays Africa outlined four clear targets to grow the business that include to be among the top three by revenue in the group’s five largest markets by 2016, to achieve an ROE in the range of 18-20 percent in 2015.
She added that the target also includes to achieve a cost-to-income ratio in the low 50s by 2016, and a revenue share of 20-25 percent from outside of South Africa by 2016.
“Six months into our three year strategy, we are exactly where we wanted to be. We have grown our revenues by 7 percent while our return on equity has improved to 16.1percent and we are confident that we can achieve the necessary milestones this year to reach our 18percent-20percent target,” said Ramos.
The Barclays Africa CEO pointed out that as expected, the bank cost-to-income ratio has increased because of the investments they are making to transform the business over the medium term.
She added that growth outside of South Africa has been strong and this portfolio now constitutes 20 percent of group revenue which is already within the range they have set as a target for 2016.
┬áShe emphasized that to deliver on the One Africa strategy, Barclays Africa prioritised four strategic areas to execute in 2014 and solid progress has been made on each.
She named some of them such as the turnaround programme for the Group’s South African Retail and Business Banking (RBB) franchise, based on simplifying processes, reshaping their branch network and investing heavily in their digital products, is taking effect.
Ramos highlighted that customer numbers have stabilised and the Group has reported growth in important segments like the core middle market and commercial segments.┬á She said RBB’s headline earnings increased 9 percent to R3,8 billion largely due to a strong performance from Home Loans as credit impairments declined.
“Having obtained the license for Barclays Life Assurance Kenya, already early signs of capturing the growth opportunity in our Wealth, Investment Management and Insurance franchise are emerging,” she stated.
A close look at Bank’s results, headline earnings in SA increased 6 percent to R5,1 billion and by 34 percent to R1,0 billion outside of South Africa. Barclays Africa Limited acquisition remained earnings enhancing.
Pre-provision profit increased 5 percent to R13,4 billion. Barclays Return on Equity (RoE) improved to 16,1 percent from 14,3 percent while the revenue grew 7 percent to R30,7 billion as net interest income rose 10 percent to R17,5 billion. Non-interest income increased 5 percent to R13,5 billion and accounted for 44 percent of total revenue.
Barclays Africa Operating expenses grew 9 percent to R17,3 billion, increasing the cost-to-income ratio to 56,4 percent from 55,5 percent. Loans and advances to customers grew 5 percent to R614,6 billion, while deposits due to customers rose 5 percent to R597,6 billion.