Barclays to miss FY14 growth target

Published: 26 May 2014

Barclays grew a quality loan book by 26% in the year to April 2014 while deposits declined by 5%, group MD George Guvamatanga told the AGM yesterday.

"Our strategy of being the 'Go-To' bank is in course. We grew a quality loan book by 26% whilst impairment remained below 1%... Interest income year-on-year growth is 13% and non-funded income year-on-year is 1% while operating costs remained flat.

"Non-funded income growth of 1% is subdued reflecting constrained growth in transactional activity. Loan loss ratio (0.7% growth) still reflects a strong loan portfolio. Focus on the quality of the loan book is to increase in view of the conditions prevailing in the market," he said.

He further noted that 2014 operating costs were contained within 2013 levels although there continues to be pressure on certain costs lines especially occupancy and IT related lines.

Moving to the balance sheet, Guvamatanga said there was 23% growth in customer assets as they are benefiting from growth in both retail and corporate loans.

"Customer liabilities are lower by 5% and deposits continue to be largely demand and to fluctuate significantly," he said.

Loans to deposit ratio grew by 12 percentage to 52% while liquidity ratio dropped 11 percentage to 48.6% and the capital adequacy ratio at 17% has also continued to be above regulatory minimum of 12%.

Giving a recap of the group's 2013 goals, he stated that they are continuing with the ‘safe bank' model which is to grow their loan book, widening their product offering, develop more e-channels and increase transaction volumes to boost income.

Commenting on the operations environment, Guvamatanga indicated that the banking sector is stable but delicate.

"I think the challenge that we've experienced in the banking sector of short term deposits that have created liquidity constraints in the market have persisted in the current year.

"We've got revised numbers from the central bank now indicating that the average non-performing loans are now at 17%," he said.

Guvamatanga further indicated that there is slower growth in deposits and advances compared to the same period last year. However, he noted that the regulatory environment and framework are improving.

Barclays sustained transaction volumes albeit at slower than planned growth.

"The bank's capital adequacy ratios, relative to current business level, are adequate and above regulatory levels. The bank will continue to review its capital base into the future to support growth targets and work towards the 2020 regulatory minimum levels," he said.

He stated that they leveraged on the group capabilities on lending and channels as they facilitated over $40million offshore facilities and guarantees.

Turning to the outlook, he told the meeting that the economic landscape requires significant decisive interventions to enhance investor confidence, promote local production and contain the imports bill.

"Clarity on key policies that foreign investors consider, is critical. Under a stable to improving economic landscape Barclays would sustain growth in the loan book and off shore lines of credit from current levels.

"At current run rate, the bank would close the year at lower than planned loan and deposit levels. The bank will continue efforts to enhance and integrate its e-channel platforms," he said.

He noted that cost, scale and efficiency initiatives will become more critical under sub optimal economic performance.

Guvamatanga indicated that they will continue to focus on superior customer payment service to secure a market share of transaction activity that is above their share of both customers' assets and liabilities.

The group's directors were re-appointed and fees of $85 574 for non-executives approved while auditors KPMG were endorsed with remuneration of $305 825 also approved.
- zfn

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