Barclays HY profit jumps 16pc

August 7, 2012
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The Bank’s Managing Director Adan Mohammed said the 10 percent growth in its top line will remain a priority/ FILE

, NAIROBI, Kenya, Aug 7 -Barclays Bank posted a 16.7 percent jump to Sh4.2 billion in its net profit for its first half-year results, buoyed by strong top line growth.

The Bank’s Managing Director Adan Mohammed said the 10 percent growth in its top line will remain a priority into the second half of the year to be supported by asset growth.

“Our objective remains growing our balance sheet; however that growth has to be matched though balancing the risks you take on, in the opportunities in lending. We will not be prepared to charge high prices because it is likely to put more strain on customers and increase our non performing debt portfolio,” he said.

Mohammed added that the bank’s non performing portfolio has been declining consistently in the last four halves since 2010 due to its efforts to manage risks and refrain from booking excessive loans on its balance sheet.

Net interest income grew by 21 percent on the back of a 36 percent rise in total interest income.

However, total non interest income slid 7.2 percent due to a decline in other income and fees and commission income.

There was a slight dip in the bank’s deposit base due to the bank’s decision to transfer loans from government bonds to customer assets that saw Barclays lend up to Sh40 billion.

“We have been much more cautious in our aggressive lending program and so we had the flexibility to have surplus and excess liquidity and not pushed in a corner to pay very high deposit rates for our customer deposits, so we were willing to let go of some deposits,” he explained.

This prudent lending and shedding off of expensive deposits led to an 18 percent rise in earnings per share to Sh0.79.

Over the six month period Barclays’ loan book grew by 10 percent, while customer deposits slipped 4.6 percent.

Mohammed had a cautious optimism for the next half of the year especially with the general elections adding that spreads will come under pressure eventually seeing most banks operate at margins in the range of five percent.

“As those spreads continue to come under pressure we have to be ready to make sure that we remain efficient and make sure some of that erosion of spreads at the top is compensated for, by booking good quality assets,” he said.

The board has recommended an interim dividend of Sh0.30 per share, 50 percent up from the previous period.

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