Barclays Africa Group Limited has reported its financial performance for the first half of the year, demonstrating continued resilience in a deteriorating economic environment in South Africa, its largest market.
The announcement marked the first time that the company reported results following Barclays PLC’s sell-down of its majority stake in the African business in a share sale.
“We are presenting a set of results that demonstrate the real value of the 2013 acquisition of the Barclays businesses in Africa,” said Maria Ramos, Chief Executive, Barclays Africa Group Limited. “Both geographically, as well as by customer segment, they are proving their worth in yielding a strong performance for the first half, even as our biggest market, South Africa, has suffered the impact of an economic downturn.”
Summary of results
Barclays Africa Group’s normalised headline earnings increased 7% to R7.8 billion, driven by strong earnings growth in the Rest of Africa, and positive earnings growth in South Africa, featuring strong growth in corporate banking. Impairments declined by 27% from a high base in the first half of 2016, contributing to the improvement in earnings.
Group revenue declined 1% to R36 billion, given a deteriorating economic environment in South Africa, which in turn caused pre-provision profit to decline 6%. The cost-to-income ratio increased to 55.6% despite a focus on cost containment and inflationary cost growth. The return on equity remained attractive and improved to 16.8% from 16.1%.
The group continues to have a sound financial position with balance sheet assets of R1.1 trillion and strong capital adequacy and liquidity reserve positions.
Successful separation from Barclays PLC will be an overarching priority for Barclays Africa over the next three years.
For the remainder of the year, Barclays Africa will place priority focus on its retail and business bank performance in South Africa and on driving opportunities in its businesses outside of South Africa. WIMI will continue to focus on retention of clients and assets, optimising opportunities presented by the pickup in momentum in Retail and Banking South Africa and returning the business outside of South Africa to profitability.
Barclays PLC Sell-down
Following the first sale tranche of 12.2% in May 2016, the next milestone was successfully navigated with the second book-build concluded in June. The transaction achieved accounting deconsolidation for Barclays PLC.