Barclays Africa Reports Headline Earnings Growth of 10%

01 March 2016

Salient features

  • Diluted headline earnings per share increased 10% to R16.86
  • Dividend per share of R10 up 8%.
  • Rest of Africa headline earnings grew 17% to R2.3bn and South Africa rose 8% to R12bn.
  • Return on Equity improved to 17.0% from 16.7%.
  • Pre-provision profit increased 8% to R29.5bn.
  • Revenue grew 6% to R67.2bn, as net interest income increased 8% and non-interest income rose 5%, while operating expenses grew 5% to R37.7bn.
  • Credit impairments increased 10% to R6.9bn resulting in a 1.05% credit loss ratio from 1.02%.
  • Barclays Africa Group Limited’s CET1 ratio of 11.9% remains above regulatory requirements and our board target range.

Barclays Africa Group Limited (‘Barclays Africa’ or ‘the Group’) today announced a 10% increase in headline earnings for the year ended 31 December 2015, delivering a solid performance underpinned by a three-year strategy implemented in 2014.

Maria Ramos, Chief Executive of Barclays Africa Group Limited says: “We delivered solid results, demonstrating that our strategy is working. Our ambition to be Africa’s leading bank remains unchanged. We are a strong, well-capitalised and independently funded business that is uniquely positioned to achieve our goals across the continent.”

Group headline earnings increased to R14.3 billion on the back of increased income while costs remained well managed.

Costs increased by only 5%, even as the group continued to make appropriate investments in our infrastructure to deliver material improvements to our service.

Return on equity improved to 17%, the highest level since 2008 and Barclays Africa is now top three by revenue in four of our five largest markets; that is, South Africa, Botswana, Ghana and Zambia. We are gaining revenue traction in key focus areas across geographies and businesses and we have seen strong loan growth in the right areas.

Retail and Business Banking (RBB), the group’s largest business unit, continued its turnaround and had another strong year with headline earnings growing 14%, playing a key role in driving overall Barclays Africa growth. RBB recorded solid revenue growth and managed costs well. The continued improvement in the quality of the home loans book and a strong collections performance in personal loans resulted in lower credit impairment. RBB’s non-interest income rose 7%.

“We added 855,000 new-to-bank customers in 2015 – an achievement that I am particularly pleased with,” says Ms Ramos. “Our RBB unit continues to make good progress in its turnaround and we have had one of our strongest revenue months on record in January 2016,” Ms Ramos says.

Improvements in the branch network and other channels, supported by investments in mobile and other technologies supported RBB’s progress.

In Corporate and Investment Banking (CIB), headline earnings increased 6% to R3.9 billion. The group’s pan-African strategy is working, with CIB’s business outside of South Africa increasing to now account for 37% of overall earnings, demonstrating that clients are seeing the benefit of the group’s integrated regional presence.

Wealth, Investment Management and Insurance (WIMI) delivered strong growth in headline earnings, increasing 11%. The WIMI offering was expanded into East Africa, with the launch of Barclays Life Assurance Kenya and the acquisition of a controlling stake in First Assurance, which also gives the group scale and presence in Tanzania.

While the commodity downturn and reduced economic growth weakened general sentiment towards the continent, Barclays Africa’s operations in the rest of Africa performed well and enhanced group growth. This shows that creating the Barclays Africa group in 2013 is working.

Revenue from operations outside of South Africa increased to 14% while headline earnings grew 17%. Operations outside of South Africa accounted for just over a fifth of revenue during 2015 and earnings growth in this region should continue to exceed those of South Africa. There is a clear path to increasing return on equity from those operations.

While the focus of the numbers we released today is on financial performance, this is only one component of our success as a business.

Barclays Africa has adopted a Shared Growth approach which for us, means generating a positive impact on society while delivering shareholder value.

Last year, the group launched ReadyToWork in seven countries across Africa and will continue the rollout in 2016. This initiative, helping to bridge the gap between the world of education and the world of work for African youth, is part of a much wider commitment to African society under our shared growth philosophy.

“We are proud to announce today that we will spend R1.4 billion over the next three years as we place increased emphasis on helping to address some of the biggest challenges facing our continent: joblessness, poverty, rising inequality and exclusion from access to education and financial services,” Ms Ramos says. “As Africa prospers, so will we.”

Barclays Africa is systemically important in most of the countries in which we operate and the company makes a significant economic contribution across the continent. In 2015, Barclays Africa paid R7.3 billion in taxes and provided employment for close to 42,000 people. We spent nearly R15 billion supporting more than 5,000 suppliers, including 1,200 small and medium enterprises.

“In conclusion, there is no doubt that the three-year strategy that we embarked on in 2014 has placed us in a stronger position than before to deliver on shareholder expectations and to play a broader role in society,” Ms Ramos says. “In Barclays Africa Group, we have built a strong and resilient franchise.”

An increasingly tough and volatile economic period will impact on the group’s ability to deliver against our targets in the year ahead. In South Africa, Barclays Africa’s largest market, the company expects 0.9% GDP growth this year, with downside risks from drought and electricity shortages.

Our balance sheet is, however, well positioned for this deteriorating macro environment given our highest level of portfolio provisions, our lowest non-performing loans since 2005, and strong capital ratios and liquidity.

In 2013, when Absa acquired the majority of Barclays PLC’s operations in Africa, a leading African bank was created.

“We continue to offer a full and integrated range of products and services to more than 12 million customers in 12 countries across Africa and our customers can be just as confident doing business with us today as they have always been. With an independent board and a separate listing on the Johannesburg Stock Exchange we are deeply rooted in Africa and remain firmly in control of our future,” Ms Ramos says.

“We continue to be optimistic about our prospects in Africa, where we have a strong franchise with assets of over R1 trillion. We are deeply committed to the success of our continent. Our destiny is in Africa,” Ms Ramos says.