Barclays Africa first-half earnings up 10 percent

July 30, 2014

JOHANNESBURG (Reuters) – Barclays Africa Group posted an expected 10 percent rise in first-half headline earnings on Wednesday boosted by its newly integrated Africa operations.

The pan-African lender, majority owned by the eponymous British bank , said headline earnings per share came in at 720.9 cents in the six months to the end of June, compared with a restated 655.7 cents a year ago.

Barclays had flagged headline earnings would rise by between 8 and 11 percent. Last year’s first-half earnings, which did not include profit from its wider African structure, grew by 8 percent.

Under a deal concluded last year, Barclays Plc handed over ownership of eight African businesses to its South African subsidiary in exchange for a 62.3 percent stake in a new combined entity that was renamed Barclays Africa Group.

Operations such as Nigeria, Mauritius, Kenya and Uganda were brought under one umbrella but Egypt and Zimbabwe were left out of the deal.

“The Barclays Africa Limited acquisition was earnings accretive, increasing the group’s HEPS by 2.3 percent,” Barclays said in its filing.

Headline earnings from the rest of Africa grew by 34 percent to 1 billion rand, faster than the 6 percent growth experienced in the bank’s biggest market, South Africa. Despite anaemic growth in Africa’s most advanced economy, South Africa’s Reserve Bank has raised interest rates by 75 basis points this year, saying it needed to keep a lid on inflation.

Analysts expect that the central bank will maintain its hawkish stance, which may augur well for banking profits but push the number of non-performing loans higher.

Barclays Africa said credit impairments fell 7 percent after a push to rein in bad loans, which spiked in 2013 for most South African banks following a spate of unbridled unsecured lending.

Net interest income – the measure of income from lending – grew 10 percent to 17.2 billion rand (956 million pounds) as the bank passed on higher interest rates.

The third-largest lender on the Johannesburg bourse, Barclays Africa is the first of South Africa’s “big four” banks to report on this season’s earnings.

Its trailing five-year EPS has contracted by 1.5 percent, according Thomson Reuters data, lagging an average 4.1 percent growth by peers.

Its shares have gained more than 30 percent so far this year, trouncing a 20 percent advance by Johannesburg’s banking index <.JBANK>.

(Reporting by Helen Nyambura-Mwaura; Editing by David Dolan)

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