Barclays Bank Of Kenya Financial results 2011

Posted by Banker on Feb 20, 2012 in Banks in Kenya | 0 comments

Barclays Bank is one of the international banks that operates banking in Kenya functions. It is one of the top banks in assets and Liabilities.

Barclays bank financial results

Most banks in Kenya, both local and international announce their financial results for the previous year between February and 31^st March.

Barclays bank of Kenya was the first bank to announce the financial results for 2011. The bank had a steep drop in net profit. The reported net profit was kes 8 billion after tax down from kes 10.5 billion in 2010. The 23.8% fall in net profit fell short of market expectations.

The bank has defied these results and will give a higher return or dividends to its shareholders. The final divided to be given out will be kes 1.5 per share which includes 0.06 per share as special dividend. This payout is 10% higher than last year’s payout of kes 1.35 per share

Barclays Bank results explained in detail

The reason given by Barclays Bank for this reduced profit is due to marginal total income growth. This kind of growth translates to a kes 1.49 per share performance. This compares adversely to the performance in 2010 of 1.95 per share. Barclays did not expect this result which is way below the forecasted outcome.

In 2010, Barclays Bank had made 3.5 billion from sales of its custody business. In 2011, these sales were not forth coming.

Inflation in Kenya rose from 5% to more than triple and ended the year at more than 15%. Interest rates also more than double between 2010 and 2011. The loan book for Barclays consequently grew to 99 billion. This growth in loan book was not reflected in the interest income which only grew to kes 13.6 billion. This is a modest growth taking into account the large loan book.

Barclays Bank mitigation strategy

Though the non interest fell by about kes 300 million to 10 billion, the prudent cost management measures employed by Barclays Bank saw the ratio drop from 54% to 52% the previous year.
A retrenchment program involving middle level managers helped to save the day by making huge cost savings to the tune of kes 1 billion
The roll out of ATMs has helped Barclays Bank Kenya in its ongoing cost saving plan. Together with ATMs Barclays Bank Kenya has also rolled out internet and mobile banking.
Barclays Bank Kenya managed to cut the costs on funds in high inflation market like Kenya was phenomenon.
Barclays Bank Kenya has been leading to stable corporate and will continue to do so in the coming years to escape the high default rate risk, as inflation continuous to bit and is unpredictable.
Nonperforming loans also dropped by over 1billion due to aggressive debt recovery strategies.

Barclays Bank may have set the tune for the results to be released by other banks, and it may be an indication that banks in Kenya will not make supper profits as has been the case in previous years.