Absa could get off the hook with collusion fine
BARCLAYS Africa could dodge a R7.2 billion fine for its role in the collusion of foreign currency trading by nearly 20 South African and international banks after the group yesterday reported total revenue of R72bn for the 2016 financial year.
The company was one of the banks fingered by the Competition Commission for having played a role in the fixing of foreign exchange rates, but it was spared monetary penalties after it agreed to co-operate and testify against the other implicated banks.
The commission referred the banks to the Competition Tribunal for prosecution and asked the tribunal to fine the banks 10 percent of their total revenue.
Chief executive Maria Ramos said the group had taken pro-active steps in helping the commission uncover the collusion. She also apologised for the bank’s actions.
The group’s headline earnings for the year increased by R5 million to R14.9bn from R14.2bn in the comparative period, while its earnings per share, excluding one-time items, rose 5 percent to R17.69.
The company’s return on equity decreased to 16.6 percent from 17 percent in the period; it attributed this to higher credit impairments which increased by 26 percent, resulting in a credit loss ratio of 1.08 percent from 0.92 percent.
Aeon Asset Management chief economist Asief Mohamed said the results were not encouraging. “The company’s credit loss ratio was likely to increase during the year, because of the indebted consumer and that does not bode well for the group.”
The group’s revenue for the year increased by 8 percent to R72bn buoyed largely from the strong performance of its Corporate and Investment Bank unit that grew its income by 17 percent to R16bn and its headlines earnings by 27.5 percent to R5bn.
The company said it had successfully stemmed losses at its retail and business banking in South Africa and that the unit had added 2.5 million new customers in the last three years.
Footprint
Ramos said the group’s operations in the continent had performed well. “The creation of the Barclays Africa Group created the platform for us to develop our businesses; it has given us a significant footprint across Africa. We set out with a vision to create a proudly pan-African bank and today… we are delivering on this ambition,” she said.
The company further announced that it was well positioned to separate from UK-based Barclays.
“It gives us the opportunity to unlock the potential to do things differently and build energy and momentum for our future as a pan-African organisation,” Ramos said.
Barclays Africa would receive £765 million (R12.49bn) as part of the agreement to separate; £515m of it would be for investments required for technology, rebranding and other separation projects.
Barclays shares dropped 0.46 percent to close at R156.85 on the JSE yesterday.