Rebranding trims Barclays earnings, I&M profit up 29pc

Barclays Bank of Kenya’s 10 per cent increase in profits has been trimmed down by a Sh243 million payment for rebranding to ABSA.

The bank’s net profits after booking the expense moved only marginally from Sh1.88 billion to Sh1.89 billion for the three months to March this year.

But the lender said yesterday it would not pay dividends to its South African parent company - ABSA Group - to claw back the cost.

“In this quarter, we have reported separation costs of Sh243 million, which are an exceptional item and will be incurred throughout the separation period,” said Barclays Kenya Chief Executive Jeremy Awori in a statement.

The separation from Barclays Plc will have an impact on Barclays Kenya’s financial results over the next two years.

The costs are expected to run into billions of shillings as the bank spends heavily on advertising, rebranding ATMs, cards and branches to the ABSA brand.

This year, the bank’s separation programme will involve immense investments and implementation of over 70 technology-specific projects.

The lender, which has up to June 2020 to change its brand, said the decision to take up the cost was purely on a tax basis since South Africa, which was to foot the bill, could not spend in another jurisdiction.

The money will be clawed back through capital as ABSA Group forfeits dividend to replace capital.

During the period under review, interest income grew from Sh6.9 billion to Sh7.4 billion while interest expenses declined from Sh5.4 billion to Sh5.3 billion.

“The performance is mainly attributable to a three per cent growth in total income and a three per cent drop in costs,” said the bank.

Meanwhile, I&M Bank has posted a 29 per cent jump in net profit from Sh1.4 billion in March last year to Sh1.8 billion this year.

Loan loss provision was down 62 per cent from Sh536 million last year to Sh200 million this year