Sunday, January 29, 2023

Barclays shares on a rebound at BSE

The country’s second largest bank by advances, Barclays Bank Botswana, continues to recoup some of its recent losses after gaining by a huge 16 thebe during the just ended week. By close of business at Botswana Stock Exchange on Friday, the bank whose market cap stands at 3,570,555,646 was trading at a new price of 426 thebe.

Barclays Bank struggled at the capital markets for almost a year, a development that saw its market value at the stock exchange going down by close to 30 percent. The bank failed to meet expectations after realizing a 34 percent decline in profit after tax (PAT) during the reporting season. However fresh figures from the local bourse indicate that the Britsh retail bank, which has since rebounded by almost 12 percent from its 12 month low of 381thebe, is trading at a P/E of 13.3x. Financial analysts at Motswedi Securities say that going forward a lot would be expected from new managing director Reinette Van Der Merwe to turn the bank’s fortunes around.

The decline came as a result of the Bank’s full year financial results which reflected a decline in profit before tax of 34 percent.┬áFinance Director Lipalesa Makepe said during the release of the results that the poor performance can also be attributed to the structural nature of the bank’s retail portfolio, with asset growth supported by lower yielding secured lending relative to the unsecured portfolio, and, secondly, the impact of lower rates on the unsecured consumer lending portfolio.┬áBarclays bank believes its recent unimpressive financial results are a reflection of the challenging year in which the bank embarked on a journey to transform and rebuild its business.┬á

On a positive note, non-interest income grew by 5.6 percent to P370 million on the back of improved treasury performance and higher transactional activity within the retail bank. Meanwhile data from the Botswana Stock Exchange shows that Barclays competitors on the banking space, FNBB and Stanchart shed 1 thebe apiece to trade at 349 thebe and 1174 thebe respectively.

Analysts at Motswedi attribute the trend to worries that interest margins in the banking sector will persist within the domestic market. At the same time, local equities were active as only 5 counters were not traded. The Domestic Companies Index (DCI) shed 52 points drifting away from its 12 month high as investors cashed in their profits after an exciting reporting season which brought a mixed bag of results from the local stocks.

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