Tanzania Daily News (Dar es Salaam)

14 February 2013

Tanzania: Barclays Bank Sees Bright 2013 Outlook

BARCLAYS Bank (Tanzania) Limited is expected to post strong profit, this year, after sailing through various challenges including high inflation that pushed up lending rates.

The bank said the double digit inflation, which reached 19.8 per cent early last year, before drop- ping to 12.1 per cent and the end of the year, adversely affected expansion of the lending portfolio as a few customers secured loans. The BBT Managing Director, Mr Kihara Maina, said the bank's restructuring was also another challenge that ate up its revenues to push down profitability level.

"After the restructuring, the bank's cost base is now optimised and going forward the underlying trajectory is strong," Mr Maina said yesterday in special interview. The MD added: "we expect to continue with positive results every month to end the year strongly-as economic parameters are right inflation continues to climb down while interest rates are also descending."

Though this year, is projected to be challenging as well given the global economic conditions, but BBT is now well captilised and profitable which will allow the bank to mitigate the effects of the said confronts. Nevertheless, the bank's year- on-year results posted a loss of 3.9bn/- compared to a profit of 1.6bn/- released in 2011.

The loss was mainly attributed to the restructuring that followed the closing of 10 branches and trimming down 100 workers that forced the bank to cough out 4bn/-. Majority of the fund, 2.9bn/- went to assets write-off basket and the rest to redundancy. The bank remains with 490 workforce. "Total costs were up by 5 per cent attributed to the restructuring costs arising from branch closure that were undertaken during the year," Mr Maina said.

He added: "Our loan impairments are up by 7.8bn/- reflecting the prudential charges we have taken on specific corporate names. In 2011 we had a net recovery of 298m/-."BBT said despite the loss the bank was not sound and strong as the bank's capital base measured by Capital Adequacy Ratio stands at 16.27 per cent which was well above the regulator's requirement of 12 per cent.

On top of that the bank said it will continue with corporate social responsibility despite clocking a loss last year. The Barclays International set aside 1.0 per cent of its net profit globally for good citizenship projects. In the country, the bank concentrates on Life Skills, Financial Skills and Entrepreneurs Skills and so far has reached over 42,000 households training them about maternal health, financial management including lending and managing business.

Meanwhile, Barclays Bank of Kenya yesterday posted an eight per cent rise in pretax profit to 13.02 billion shillings ($148.8 million) for 2012, helped by slim growth in its loan book and a fall in bad debt. The bank, a unit of Barclays PLC, said it would pay a dividend per share of 1 shilling, 11 per cent higher than the previous year.

Market analysts forecast strong results for Kenya's banking sector after inflation and interest rates fell sharply in 2012 and the local currency stabilised following a torrid 2011. Adan Mohamed, Barclays' outgoing managing director for the east and west Africa region, told an investor briefing that total income rose four per cent to 27 billion shillings, while costs were up 5 percent. He said bad debts fell to 3.8 billion shillings during the year from 5.5 billion shillings in the previous period, aided by significant recoveries.

The bank's loans to customers rose to 104 billion shillings in 2012 from 99 billion shillings in the previous year, while the cost income ratio was stable at 52 per cent in 2012, Mohamed said. Barclays PLC and South Africa's Absa Group plan to merge the bulk of their African businesses outside of South Africa, with Barclays relinquishing direct control of eight of its operations on the continent in exchange for 129.5 million new shares in Absa.

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