Mine closures hit Barclays loan book
- Ex-Mine employees loans spur P41 million impairments figure
- But Bank resurgent as it doubles earnings in last half of 2015
The laid off 1,200 employees at the recently closed African Coppers Mowana and Thakadu Mines as well as Boseto Mines have prompted Barclays Bank of Botswana to impair its loan book by P41 million.
We realised earlier on that it is best to adjustment our loan provision amounts to reflect the realities, after the mines closed, said a Barclays Executive.
Softened international commodity prices, catalyzed by a subdued Chinese economy, hit Discovery Metals Boseto operations, where the price of copper fell by 15 percent, causing a cash flow negative environment for the mine resulting in 800 workers being laid off in early 2015.
African Coppers mines closure resulted in another 400 employees losing their jobs, after several piecemeal retrenchments.
Our 62.5% higher credit impairment was driven largely by personal loans. During the year we also absorbed the impact of two mines that went into liquidation with an impairment of P41m in total, said Reinette van der Merwe, Barclays Managing Director.
Despite the tough banking environment, Barclays emerged with a profit before tax of P332 million for the year 2015. Loans and advances grew by 20 percent from the previous period to reach P9,8 billion. The Bank pulled off a major feat in the second half of 2015 to double its first half profit figure. The growth was spurred by growth in the Corporate and Investment Banking which both realized Income and Balance sheet growth in excess 50 percent year on year.
The whole banking sector saw decreased profitability since 2014, as the banking environment was laden with challenges among them, the only recently ended moratorium on bank charges increases, which was imposed by the regulator Bank of Botswana, which lasted for two years.