Barclays Zimbabwe posts a strong set of financials

Published: 10 August 2017

Barclays posted a strong set of financials for H1 17, showing a 2.9x surge in attributable earnings to $9.5m, just shy of FY 16 earnings of $10.8m. NII income was supported by the bank's access to low cost deposits and the 129.5% increase in income from TBs to $2.6m.

The 51.0% increase in non funded income was supported by a 244.6% jump to $9.1m in forex trading and a 13.3% increase to $15.5m in fee and commission income. The CIR (pre-provision) improved to 62.7 from 80.3% as costs were contained growing at 8.2% well below the total income growth. The major contributor to operating expenditure remained staff costs at approximately 51.7% of operating expenditure. Other cost pressures were cash transportation costs +56.4% year on year, subscription, publications, stationery and communications and insurance costs. The downturn in the economy prompted Barclays' to increase its cost of risk from 0.3% to 0.9%. No interim dividend was declared.

The group's balance sheet increased 0.8% from year-end on the back of increased profitability as well as 17.8% rise in cash and bank balances. The quality of the advances book deteriorated as Gross NPLs increased by 5.2x from December 2016 to $12.4m, representing 10.3% of advances up from 1.6% at year-end. Although the NPLs increased, the bank is confident of this reversing before year-end as this was an isolated case involving technicalities with the clients involved.

Barclays Plc announced that it signed a Share Purchase Agreement with FMB Capital Holdings in May 2017. Both Barclays Plc and FMB are working to fulfil the conditions precedent to the completion of the transaction, which include securing the requisite regulatory and statutory approvals. The bank advises that is engaged in activities to prepare for its separation from Barclays Plc. These include defining the scope of change in systems and processes envisaged in separating the bank from Barclays Group.

Management stated that it has built a scalable business and will continue to optimise balance sheet and improve return on assets. In our view, the bank should continue to benefit from volume growth in commission related transactions enhanced by the launch of new products. It is encouraging to note that for H1 17 the bank's operating expenditure was fully covered by NFI.
- BD

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