Barclays defies shrinking deposits to post profits

By James Anyanzwa      

Barclays Bank of Kenya pre-tax profit for the six months to June 30 grew by 18 per cent even as the bank’s management sold some Treasury bonds to compensate for the shrinking deposit base.

The bank’s profit before tax increased to Sh6.31 billion from Sh5.34 billion in a similar period last year, while customer deposits fell five per cent to Sh122.48 billion from Sh128.43 billion. Consequently, Barclays liquidated about Sh21 billion worth of treasury bonds to meet the growing demand for credit which has seen the bank’s loans and advances to customers grow 10 per cent to Sh101.1 billion from Sh91.82 billion.

Managing Director Adan Mohamed attributed the bank’s profitability to growth in income and prudent cost management through investment in technology.  “The commendable results arise from the bank’s ability to continue with its sustainable growth momentum achieved over the years,” Mohamed told an investor briefing in Nairobi on Tuesday.

According to the bank’s unaudited financial statements released on Tuesday total income went up 10 per cent to Sh13.69 billion from Sh12.48 billion while operating expenses rose four per cent to Sh7.38 billion from Sh7.13 billion in a similar period. Interest income increased 36 per cent to Sh10.63 billion from Sh7.8 billion while interest expenses tripled to Sh1.66 billion from Sh413.74 million owing to a high interest rate environment. “We have got to make sure that we balance the cost of funds and the rates we charge our customers,” said Mohamed. The directors approved an interim dividend of Sh0.3 per share compared to last year’s Sh0.2 per share.