Barclays profit to double: Report

HARARE - Barclays Bank Zimbabwe (BBZ) is expected to double its profit to $3,8 million in the full year to December 2014 due to high quality earnings and declining interest expenses, an investment report has shown.

BBZ, a subsidiary of United Kingdom-based Barclays Plc, recorded $1,7 million after tax profit in the  six months to June buoyed by growth in incomes.

The bank’s deposits also grew by three percent to $238 million in the first-half of 2014 compared to the same period prior year.

According to a recent report by EFE Securities, the Zimbabwe Stock Exchange-listed financial institution is expected to replicate its half year performance.

“Based on this, full year revenues will come in at $42,95 million which is a growth of 19 percent on the prior year. Impairments losses will remain stable at 0,47 while profit before tax and profit after tax will come in at $5,4 million and $3,78 million respectively to achieve an earnings per share of 0,18 cents,” said EFE Securities.

The equities research firm noted that a stable earnings growth by the bank will hinge on its ability to offer convenience to customers through innovative initiations and continuous e-commerce re- jiggering.

“Earnings will also invariably be driven by the banks’ courage to grow its loan book while striking a balance with risk aversion. This will ensure avoidance of the paradox of the thrift and help sweat the bank’s generous assets for a return,” read part of the report.

With the Reserve Bank of Zimbabwe (RBZ) having set new capital requirements, the bank comfortably registered a 17 percent capital adequacy ratio to maintain a safe margin of five percent from the required rate.

BBZ achieved a liquidity ratio of

54 percent, which sets its operational viability as sound while providing a cushion against possible runs and related risks.

“We believe the outright strength of Barclays remains its safe banking model and the synergies

accrued from relations with the parent bank which provides both a stabilising effect as well as a platform for future growth,” said EFE Securities.

BBZ, which has submitted its proposals to the RBZ in respect of the minimum capital threshold of $100 million applicable from 2020, is one of the few banks in the country with a well-managed loan book.

In the six months to June this year, BBZ attained a nonperforming loans ratio of two percent against the national average of 18,5 percent, thus showing the bank’s unparalleled prudential risk practices as it focuses on maintaining a quality loan book.
 

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