Transition costs trim Barclays earnings in Ksh.3.9 billion half-year profit


Transition costs trim Barclays earnings in Ksh.3.9 billion half-year profit

In Summary

  • Barclay’s incurred an additional Ksh.560.8 million towards the process bringing its net transition charge to date to Ksh.804.2 million.
  • Even so, the bank has handled the charge through internal operational cash flows having taken no new debt or additional funding from shareholders, maintaining its dividend per share payout at Ksh.0.20 in the period.
  • The exclusion of the one-off charge in transition would have seen the bank post up a remarkable 13 percent growth in profit after tax (PAT) to Ksh.4.3 billion on an account of a strengthened balance sheet.

Barclays Bank has announced a slim 2.6 percent growth in earnings for the first six months of 2019 to Ksh.3.9 billion.

The narrow growth in net profit from Ksh.3.8 billion in the preceding period is largely attributable to the lender’s additional investments under its ongoing transition process into the ABSA brand.

Barclay’s incurred an additional Ksh.560.8 million towards the process bringing its net transition charge to date to Ksh.804.2 million.

The transitional costs, which the bank expects to remain a key feature in its balance sheet over the course of the next two years, persist even as the lender marks the completion of over two-thirds of the capital exhausting undertaking.

“Our transition journey to Absa has now gained momentum and is about 65% complete. We are making significant investments in technology, branch modernization and branding, which will ultimately enable us to give our customers a better banking experience,” Barclays Kenya Managing Director, Jeremy Awori, said.

Even so, the bank has handled the charge through internal operational cash flows having taken no new debt or additional funding from shareholders, maintaining its dividend per share payout (DPS) at Ksh.0.20 in the period.

The exclusion of the one-off charge in transition would have seen the bank post up a remarkable 13 percent growth in profit after tax (PAT) to Ksh.4.3 billion on an account of a strengthened balance sheet.

Barclay’s loan book grew to Ksh.186.7 billion alongside customer deposits which widened by an additional Ksh.12.9 billion taking net interest income earned to Ksh.15.2 billion.

At the same time, the bank trimmed its operational expenses by 9.6 percent to a flat Ksh.10 billion even as gross operating income grew ahead of expenses to Ksh.16.3 billion as the lender’s value of non-interest funded income (NFI) jumped to Ksh.5.3 billion.

Further, the bank marked improvement in its asset appreciation having shaved off its non-performing loans by Ksh.300 million in the period to Ksh.4.3 billion without incurring an additional loan-loss provisioning charge to bring down its bad loans exposure to Ksh.2.2 billion.

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Story By Kepha Muiruri
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