Barclays Bank's net interest income up 61%

Published: 12 February 2014

Barclays Bank Zimbabwe's net interest income increased by 61% to $12.31 million while non-funded income went down by 9% to $27.19 million which reflects the effects of the capped charges on fees and commissions, group CFO Samuel Matsekete told an analyst briefing yesterday.

He also said while at industry level the interest rates were coming down and converging to a narrower range at Barclays they didn't experience reduced yields on assets as a result of their strategy of targeting customers who give them "an optimised risk adjusted net interest."

Matsekete indicated that increase in transaction volumes will be the key driver of non-funded income in 2014.

PBT for FY13 was 70% higher at $5.184 million while PAT recorded a 43% increase to $2.952 million.

Matsekete noted that cost to income ratio went down by 5 percentage points to 85% while loan loss ratio remained stable at 0.6% and this will "be kept low with the maintenance of a quality loan book."

EPS went up by 0.04c to 0.14c.

On the balance sheet customer deposits grew by 10% to $247.9 million.

"In 2013 we leveraged mainly 3 things to grow our deposits namely the channels, service and the security as well as the confidence that we needed to sustain in the bank. So the growth you see in our deposits is not reflecting a higher cost of funding."

He said the cost funding is the same if not lower what they had for 2012.

Looking at the sector distribution of deposits, he indicated that trade and services held 32%, physical persons 27%, transport and distribution 16%, agriculture 9%, financial services 8% and light and heavy industry 7%.

"We also did quite a few things on the loans….we grew the loans but we maintained a focus on the quality of the loan book. I think what has informed our strategy in lending has really been the specific counterparties and the structures that we can secure with those counterparties," said Matsekete.

Under the sector distribution of loans light and heavy industry had 38%, transport and distribution 29%, physical persons 17%, agriculture 9% and trade and services 7%.

Furthermore, he told analysts that impairment on the loans was contained within a loan loss ratio of 0.6% "which reflects the quality of our loan book."

"Obviously that's a natural outcome which we've always spoken about since we dollarised, which we've not wavered from in terms of highly selective approach," he added.

Liquidity ratio went down by 5 percentage points to 53% and Matsekete pointed out that it needed to come down as they're deploying some of those funds into loans and increasing their loan book.

"The liquidity ratio is still way above the average in the market. For us we've actually used it to leverage on the service that we give on payments and the service that we give on settlements," noted Matsekete.

Total assets went up 9% to $307.8 million for the period under review.
- zfn

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