Barclays Bank profit rises to Ksh.7.4 billion on new revenue streams


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In Summary

  • The up-turn in fortunes is largely underpinned in the lender’s ongoing business diversification initiative which helped push up the group’s share of non-interest funded income by 15 percent to Ksh. 9.7 billion in the calendar year.
  • Barclays who in the year to December 2018 began new investments in diversified portfolios such as bancassurance and trade finance saw its deposits grow by 12 percent to Ksh 207 billion with the bank’s loan book extending to Ksh 177 billion from Ksh. 168 billion.

Barclays Bank Kenya (BBK) has announced a seven percent growth in profits for the year ending December 31, 2018 to close the year with a profit after tax (PAT) topping Ksh.7.4 billion.

This is an increase from the Ksh.6.9 billion in earnings recorded over a similar period in 2017.

The up-turn in fortunes is largely attributed to the lender’s ongoing business diversification initiative which helped push up the group’s share of non-interest funded income by 15 percent to Ksh.9.7 billion in the calendar year.

“We are getting bigger returns from our new revenue streams and secondly, we are also doing quite well on our existing business model registering greater transactions from our customer base,” BBK Chief Financial Officer (CFO) Yusuf Omari said.

The lender, who in the year to December 2018, began new investments in diversified portfolios such as bancassurance and trade finance saw its deposits grow by 12 percent to Ksh.207 billion with the bank’s loan book extending to Ksh.177 billion from Ksh.168 billion.

Barclay’s total operating costs narrowed by 2 percent to Ksh.17.2 billion as the bank’s focus on the automation of processes and services through digitization held costs down to improve the lender’s cost to income ratio (CIR) to 51.4 percent from 55.5 percent in 2017.

The notable performance was however on the back of increased impairment costs which rose 24 percent to Ksh.3.9 billion on an account of additional loss provisioning under the recently implemented IFRS 9 accounting standards in January 2018.

Non-Performing Loans (NPLs) also ate into the bank’s earnings expanding by 10 percent to Ksh.13.9 billion from 12.6 billion.

The share of bad loans by the lender however remained muted at 7 percent to steer clear of the 12 percent banking industry average.

Barclay’s bank was also forced into an additional Ksh.274 million one off payment to foot costs towards the ongoing transition into the ABSA Group family.

Timiza, the lender’s recently launched virtual banking tool continued to reap dividends for the bank disbursing Ksh.10 billion in loans within the first nine months of operation.

Innovation to include the launch of new approaches to banking and the bettering of existing tools to improve service delivery to customers remains the primary focus to drive the lender into an even greater profitability.

“Banks are going to continue to look towards automation to become more efficient taking out costs which they can then invest in new products & services and efficient pricing for customers. This is what we are looking at,” BBK Chief Executive Officer Jeremy Awori said.

The bank has recommended a 10 percent increase in dividend payout to shareholders to Ksh.1.10 from the Ksh.1.00 dividend per share (DPS) payout in 2017.

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