Bar­clays Africa credit im­pair­ments spike

Chronicle (Zimbabwe) - - Business -

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

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