NAIROBI, Kenya, Aug 3 – The ongoing restructuring at Barclays Bank of Kenya (BBK) has began bearing fruit, as the bank posted a 13 percent jump in profit before tax for the six months ended June 2011.
On Wednesday, BBK announced that its pretax profits grew to Sh5.3 billion from the Sh4.75 billion posted during the corresponding period in 2010 as it managed to keep a lid on its expenses.
Briefing investors, Managing Director Adan Mohamed said a 12 percent dip in net interest income to Sh7.3 billion from Sh8.4 billion, a 15.6 percent reduction to operating expenses was able to offset the difference.
“Our focus was on controlling growth in quality assets balanced with making positive returns for the shareholders,” Mr Mohamed said.
Total income dipped to Sh12.48 billion from Sh13.2 billion in the year-ago period, but a Sh1 billion reduction in costs and a 44 percent fall in provision for bad debts to Sh393 million offset the fall in income.
Mr Mohamed said interest rate volatility that has been witnessed in the market had impacted their investment in government securities.
“We have a high proportion of government bonds and bills relative to previous years and these have lower yields than other assets,” the MD said.
With inflationary pressures putting a squeeze on availability of disposable income for most Kenyans Mr Mohamed issued caution over the bank’s performance in the second half.
“Inflation will play a part in our future decision on whether we want to lend aggressively to people whose disposable income is going to be put under pressure,” Mr Mohammed stressed.
During the six months under review, non-interest income rose 5.1 percent Sh5.1 billion driven by fees and commissions and forex trading. Customer deposits grew to Sh128 billion as customer assets stood at Sh92 billion.
Total shareholder funds grew from Sh27.2 billion to Sh28 billion. The board of directors has recommended a Sh20 (20 cents) interim dividend payable on or around October 7 2011 to shareholders in the register at the close of business on September 2.