Barclays tanks on interim results

Barclays Bank Botswana’s newly appointed Managing Director (MD), Reinette van der Merwe will have her work cut out for her as she comes to pilot a ship in uneven waters. The bank released unimpressive interim results that showed a general decline in most fronts of the business at the close of last week. The results show an 18.4 per cent decline on its profit after tax year on year.

 
Van der Merwe, who is an Audit professional, becomes the first foreigner to head the bank in more than 10 years as it restructures under its ‘One Africa’ strategy. She will have to apply herself to turn the tide as the half year, 30th June, 2013 results show that the Net interest income dropped by 3 per cent due to a higher interest expense of P141.5 million, which was 12 per cent higher than that for the period 30th June, 2012. Both the retail and corporate banking divisions saw significant declines of 9.6 per cent and 27.8 per cent respectively.

 
Barclays’ dismal showing sticks out like a sore thumb among  the top three commercial banks, Standard Chartered released their interim results earlier last week and in contrast, they had a total income growth of 11 per cent at P483 million, as their retail and corporate divisions grew by 12 per cent and 10 per cent respectively. FNBB reported their end of year results which showed a 23 per cent growth.

 
According to a banking insider, there were generally two problems with Barclays Bank. The lack of a substantive MD in almost two years has denied the bank a growth direction in a delicate economic period. Aupa Monyatsi has been interim MD for the period and is expected to depart for the Barclays’ regional head quarters in South Africa. The insider said there was a general lack of innovation within the bank, which has resulted in them losing business to the increasing competition.

 
According to Motswedi Securities’ weekly analysis, the bank’s stock was one of the largest losers of the week with a 0.2 per cent loss in price to 569 thebe by end of business Friday. “The second largest bank by market capitalization had an 18.4% dip in headline EPS (Earnings Per Share) making the stock to trade at a P/E (Price Earning) multiple of P12.2.”

 
On the results commentary, the board is blaming economic conditions for their awful showing in the six months under review. “While the adverse effects of the 2010 global economic downturn continue to affect world economy, with recovery beginning to occur in certain markets, Botswana’s Gross Domestic Product expanded by 3.6 per cent in the twelve months to March 2013, down from 6 per cent for the corresponding period in the previous year, reflecting an increase of 5.2 per cent in non-mining GDP, together with a contraction of 6.1 per cent in the mining sector. The slow growth is attributed to Mining, Water & Electricity, Agriculture and Manufacturing which recorded negative growths of 3.6, 5.0, 9.5 and 154.6 per cent respectively; all other sectors recorded a positive growth of more than 2.0 per cent over this period,” read the board’s statement.
It further states that “the 3 per cent marginal decline in total income is reflective of the low interest rate regime in which we operate in.”
The board is expected to payout a dividend of 11.735 thebe.