Barclays profit dips to Sh3.5b despite increased lending

Barclays Bank of Kenya M.D Jeremy Awori

In Summary

  • Despite the drop, the lenders assets continued to grow from Sh256 billion to Sh268 billion.
  • Other interest income fell drastically from Sh1 billion to Sh13 million while income from deposits in other banks fell by half from Sh86 million to Sh49 million

NAIROBI, KENYA: The Group holding company of Barclays Bank of Kenya has reported a 12.5 per cent dip in profits after taxes in the first half of this year, netting about half a million less than a similar period last year.

The lender posted a profit of Sh3.5 billion in the six months to June down from Sh4 billion last year owed mostly to a dip in interest incomes and fees and commissions on loans.

According to the bank’s Managing Director, Jeremy Awori, these results are a demonstration of the bank’s resilience in a challenging operating environment that is largely characterised by tough macro-economic conditions and the effects of the new interest rates law.

“Continued growth in the SME loan book is a clear demonstration that the decision by the bank to make capital and training more accessible to SMEs is paying off. Similarly, growth on the Corporate banking book is being driven by an on-going diversification agenda that has seen the bank increase its focus on public sector clients and large local corporates so as to ensure sustainable results for the business,” said Mr Awori.

According to the lenders published books of accounts, the direct interest charged on loans actually ticked up to Sh10.4 billion from Sh10.1 billion last year over increased lending by up to 6 per cent.

However, other interest income fell drastically from Sh1 billion to Sh13 million while income from deposits in other banks fell by half from Sh86 million to Sh49 million.

Barclays profitability cushioned by lower provisioning for bad debts which reduced by Sh656 million despite the growing amounts of non-performing loans from Sh8.7 billion in the first half of last year to Sh11.9 billion to June this year.

The Bank said the 33 per cent drop in loan impairment costs from Sh2 billion in 2016 to Sh1.4 billion this year was largely attributed to enhanced internal efficiencies on the collections and recoveries front as well as a better performance from the new bookings.

The lender which announced the closure of seven branches and a retrenchment deal for about 130 employees saw staff costs slightly tick up from Sh4.8 billion to Sh5.1 billion while renal charges dropped marginally from Sh643 million to Sh632 million.