Bar­clays eyes 20% home loans

Present mar­ket share is 16%

The Star Early Edition - - BUSINESS REPORT - Di­neo Faku

BAR­CLAYS Africa plans to grow mar­ket share in its home loan di­vi­sion to 20 per­cent by De­cem­ber, as it re­ported on Fri­day that head­line earn­ings had grown 7 per­cent on stronger earn­ings in the half year to June.

Bar­clays Africa, which op­er­ates in coun­tries such as Ghana, Kenya and South Africa, said on Fri­day that home loans’ earn­ings had fallen 9 per­cent to R764 mil­lion, largely due to 5 per­cent lower net in­ter­est in­come as loans de­clined 1 per­cent and its mar­gin nar­rowed be­cause of in­creased in­ter­est sus­pended.

Ja­son Quinn, the fi­nan­cial di­rec­tor at Bar­clays Africa, said that the group planned to ac­cel­er­ate the growth of its home loan mar­ket.

“Our mar­ket share is 16 per­cent, and we would like to reach the 20 per­cent level by De­cem­ber,” said Quinn. Nor­malised rev­enue de­clined by 1 per­cent to R36 bil­lion, given a de­te­ri­o­rat­ing eco­nomic en­vi­ron­ment in South Africa, which in turn caused pre-pro­vi­sion profit to de­cline 6 per­cent.

In South African re­tail bank­ing busi­ness, Bar­clays Africa said head­line earn­ings fell 10 per­cent to R3bn while pre-pro­vi­sion prof­its de­clined 7 per­cent, par­tially off­set by 6 per­cent lower credit im­pair­ments.

Bar­clays Africa’s South African head­line earn­ings grew 2 per­cent to R6.14bn, while the rest of Africa rose 19 per­cent to R1.469bn to ac­count for 19 per­cent of group earn­ings from 17 per­cent.

Quinn said the num­bers were in line with ex­pec­ta­tions.

“We set out a fairly cau­tious out­look. In the guid­ance we said that given to the low eco­nomic back­drop, we thought our mar­gins would come down, and that’s what played out. The macro-eco­nomic back­drop has de­te­ri­o­rated even fur­ther.”

Quinn said in­vestor con­fi­dence in South Africa had a neg­a­tive im­pact on the group.

“There is a con­se­quence of con­fi­dence, whether it is a home loan or big cor­po­rates that are hold­ing back on spend­ing. In ad­di­tion the rand was strong in the first half of this year, com­pared to last year, and that is not good when you trans­late earn­ings in our other mar­kets,” he said.

Quinn also said the com­pany was also im­pacted by reg­u­la­tory is­sues in South Africa and Kenya.

Mean­while South African Re­serve Bank gov­er­nor Le­setja Kganyago ear­lier this month said that the repo rate would be cut by 25 ba­sis points to 6.75 per­cent.

Quinn said the move was the first cut in a shal­low cy­cle. “We do not ex­pect any cuts. We think that we may have the next cut in Septem­ber or early next year. He be­lieved the cut was mod­est.

“It will pro­vide re­lief for con­sumers and al­low them to deal with their debt. We do not think that it changes the risk of bad debt or the cur­rent credit out­look,” he said.

“We are pre­sent­ing a set of re­sults that demon­strate the real value of the 2013 ac­qui­si­tion of the Bar­clays busi­nesses in Africa,” chief ex­ec­u­tive Maria Ramos said.

Bar­clays Africa shares de­clined 2.16 per­cent on the JSE on Fri­day to close at R143.93.

PHOTO: SIMPHIWE MBOKAZI

Bar­clays Africa said on Fri­day that the sell-down by par­ent com­pany, the UK’s Bar­clays, was on track, and Maria Ramos, the chief ex­ec­u­tive said pub­lic in­sti­tu­tions had to be re­spected in the process.

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