Tuesday, March 5, 2024

Barclays profits shoot up but investors concerned about global downturn

Barclays Bank of Botswana (BBB), the titanic commercial bank on the Botswana Stock Exchange (BSE), brightened the faces of long term investors on Thursday by saying its profit before tax will be up to record levels for the full year but analysts said this was still not good enough to drive the market.

“It looks like they had a good year. I think they did not have any significant bad debt provision,” Leutwetse Tumelo, Chief Executive Officer of Capital Asset Management, said Friday.

Sources said Friday that a number of factors such as the restructuring process and lower debt provision during the full year to the end of 2008.
Barclays recorded profit before tax of P 295 million for the 2007 financial year and its last year’s results will be announced on March 25.

“The bank has released a trading update advising shareholders that they anticipate an increase of more than 50 percent in profit before tax for the year ended 31 December 2008, compared to profit before tax of P 295 million for the year ended 31 December 2007,” the bank said Thursday.

“If you look at the 2007 results, the bank had provision for Lobtrans and African Express, which impacted on its balance sheet. It appears over the last year they did not have any significant losses,” Tumelo said.

In the previous year, Barclays lost P 92 million ÔÇö nine fold its 2006 provision — which was largely blamed on the two companies that imploded towards the end of the year, namely the courier outfit, African Express and Lobtrans.

“2007 was a year of growth, which saw us being in control of 60 percent of retail and commercial floor space in the country. We have opened sales and service centers in a number of places,” Chief Executive Officer of BBB, Thuli Johnson, said in April last year.
The bank currently has 106 ATMs in the country and the plan is that ultimately its ATMs will be able to take the deposits.

Further, for the most part of last year, Barclays has been working on a new IT platform that is expected to position itself against its peers.

The new platform, which will give it a superior band-width that will enhance service delivery, including cutting the loan application turn around period from 48 hours to 30 minutes. The new system will also provide varied services, such as internet banking and cell-phone banking, which are believed will be introduced by early next year.
In 2007, its loan book grew by 30 percent to P 879 million and was mainly geared towards consumer banking while assets shot-up to P10.7 billion.

“During last year, they went through an extensive expansion and the restructuring exercise. I think those things are now beginning to pay back,” Chief Executive Officer of Stockbrokers Botswana, Geoffrey Bakwena, said.

However, both analysts said the 50 percent jump on the profit before tax is unlikely to change the behaviour of investors in the market as people are more worried about what will happen during the course of 2009.

“The market had already digested the fact that Barclays and other banks would do well during 2008, but investors are more worried about 2009,” Tumelo added.

“The results might spark some excitement but that would be short-lived,” Tumelo said.


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