Barclays Africa credit impairments spike
THE dire economic conditions in South Africa, and in some parts of the banking group’s African operations, reflected in Barclays Africa Group’s results when credit impairment losses rocketed in the six months to June.
The credit impairments jumped 46 percent to R5.2bn, raising Maria Ramos’s bank’s credit loss ratio to 1.29 percent, from just under one percent a year earlier.
But this measure was amended in the period, said Barclays, “to use gross customer loans and loans to banks, rather than customer loans”.
This had the effect of making the credit loss ratio look significantly better than it really was on the old disclosure method. On that old measure, the measure would have surged to 1.48 percent from 1.11 percent.
It is retail customers, rather than corporates, that are more likely to default in depressed economic environments.
Among Barclays’ operations are markets like Zimbabwe, Ghana, Nigeria and Mozambique, which are all going through varying degrees of economic trouble.
After declining 0.36 percent in the first quarter, Nigeria’s economy — heavily reliant on oil prices, which have dropped more than 70 percent over the past two years — will probably shrink 1.8 percent this year, said the International Monetary Fund earlier in July.
Mozambique’s economy is also in difficulty as internal strife threatens to return the country to a civil war. Cash shortages and a blockade of imported goods will likely also tip Zimbabwe into a recession this year.
Both the IMF and the South Africa Reserve predict SA will narrowly avoid a recession this year.
e bank says non-performing loans increased 17 percent to R31.4bn, or 3.8 percent of gross loans and advances. Most of the losses came from the SA unit. Perhaps as a sign of the tough economic conditions, personal loans credit impairments jumped 22 percent.
On the good side, headline earnings from the rest of Africa jumped 33 percent, dwarfing the pedestrian three percent growth in SA. — financial mail