Tuesday, October 27, 2020

Barclays share price falls on investor dissatisfaction

Although statistics coming from the capital markets indicate that investors continue to show more appetite for local stocks, figures from the Botswana Stock Exchange (BSE) also show that local bank, Barclays Bank Botswana, is getting ‘less’ interest from the same investors.
The bank recently released unimpressive interim results that showed a general decline in most fronts of its business. By the end of last week, Barclays and security giant, G4S Botswana, were the only counters trading in the red at the local bourse.
Available figures shows that investors at BSE continue to show more appetite for local stocks as the Domestic Companies Index (DCI) approached its 12 month high after gaining over 16 percent for the year thus far.
On Friday, Barclays shed six thebe to trade at a new 12 month low of 556 thebe, after realising an 18.4 percent decline on Profit After Tax (PAT). The London headquartered bank was still trading at 556 thebe by close of business at BSE on Monday.
Garry Juma, a financial analyst at a local stock brokering company, Motswedi Securities, attributes the poor performance of the bank’s stock to investor’s satisfaction.
“Although the environment remained challenging for the bank with lower interest rates, as the central bank cut the rate by 1.5 percentage points this year to 8 percent, investors were dissatisfied with the lower increase on net interest income which was almost flat for the period yet the advances grew by 9 percent.”
However Juma point out that the coming of the new managing director Reinette Van Der Merwe who is expected to report for duty on the 18th of this month will turnaround Barclays Bank’s fortunes. ┬á“With a new managing director in place and price to earnings (P/E) of 11.9x (almost equal to the market average) investors are hoping for a turnaround of the banks fortunes.”
The company’s half year financial results for the period ending 30th June, 2013 results show that its net interest income grew marginally by 3 percent. Both the retail and corporate banking divisions saw significant declines of 9.6 per cent and 27.8 per cent respectively.
┬áHowever, the bank’s financials also show that its retail banking business continued to play a significant role on overall performance, contributing 62 percent (2010: 64 percent) to the total income. The corporate banking segment increased its contribution by two percent points to 17 percent while the treasury and cards each contributed 11 percent.

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The Telegraph October 28

Digital edition of The Telegraph, October 28, 2020.