Barclays earnings up 13 per cent but future looks bleak

By JACKSON OKOTH

Even as the economy gets a beating from devastating impact of drought and weakening of the local currency, Barclays Bank of Kenya (BBK) recorded a 13 per cent rise in profits before tax for the first months of the year.

The profits increased to Sh5.3 billion from last year’s Sh4.7 billion. Despite the appreciation, its after-tax profits fell by Sh1 million to settle at Sh3.6 billion.

The release of the bank’s results comes at a time when the economy is facing significant challenges of rising inflation and interests rates, weakening of the shilling, power rationing and drought.

"The rising inflationary pressure is the most devastating of all economic indicators. This is due to the fact that it is exerting pressure on households’ incomes," said Adan Mohammed, the regional managing director of the bank.

Experts say increased domestic borrowing by the Government is also putting pressure on interest rates as the Treasury’s appetite for funds shoots up.

"We have delivered strong profit growth in the wake of increased pressure on margins and volatile economic environment," he said.

Internet banking

Due to the delicate nature of the economy, the bank says it will be vigilante on whether to embark on aggressive lending.

While Barclays Bank has introduced free services on its automated teller machines and has a similar offer on mobile and internet banking, uptake of these offers has been dismal.

"We are yet to see a significant shift in customer behaviour. But we expect uptake to go up in the long-term as customers look for cheap delivery channels," said Mohammed.

The bank’s total income declined which was attributable to a decline in the volume of personal loans.

"A shift in this mix is already taking shape and we therefore expect a change in the second half of the year," said the managing director.