Key points:

  • Headline earnings increased by 5% to R14.9 billion, with South Africa up 2% to R12.2bn and Rest of Africa up 17% to R2.8bn
  • Pre-provision profit increased by 10% to R32.4 billion
  • Revenue increased by 8% to R72.4 billion
  • Barclays Africa Group Limited’s Common Equity Tier 1 (CET1) ratio increased to 12.1%, well above regulatory requirements
  • Contribution from non-SA businesses increases to 23% of group revenue
  • Revenue grew 8% while costs increased by 6%, with positive effect on our cost-to-income ratio, which improved to 55.2% during the period.
  • Impairments increased by 26% resulting in a credit loss ratio of 1.08% from 0.92%

Barclays Africa Group, the financial services group with operations in 12 countries in Africa, today reported a third consecutive year of earnings growth.

“The creation of the Barclays Africa Group was a crucial strategic play - it created the platform for us to develop our businesses,” said Maria Ramos, Chief Executive, Barclays Africa Group. “It has given us a significant footprint across Africa. We set out with a vision to create a proudly pan-African bank and today we can confidently say that we are a delivering on this ambition.”

A key priority since the formation of the group was stemming losses at our retail and business banking (RBB) franchise in South Africa, which remains our largest revenue generator. RBB added 2.5 million new customers over the last three years, generating strong returns.

Other priorities over the past three years included growing our corporate banking operation, which has achieved double-digit growth for the past four years; and, delivering on the opportunity we have in our Wealth, Investment Management and Insurance (WIMI) business, which is achieving an attractive 23.9% return on equity.

2016 performance

Barclays Africa Group’s headline earnings increased 5% to R14.9 billion in 2016 compared with 2015 as efforts to contain costs and increase efficiencies in order to invest in delivering better services to customers yielded results. Revenue increased by 8%, outpacing the 6% increase in the cost of running the business.

Slower economic growth resulted in an increase in impairments, and non-performing loans (where customers are more than three months in arrears). South Africa's economic growth is expected to have slowed to 0.4% in 2016, while growth in the Group’s presence markets in the rest of Africa slowed to 3.7%, the weakest level in more than a decade.

Credit impairments rose 26% in 2016 compared with 2015, negatively affecting the return that Barclays Africa shareholders earned on the money they invest in the business. Return on equity declined to 16.6% from 17% in 2015. 

Outlook

In 2017, we expect to see modest economic recovery with South Africa’s economy estimated to grow at 1%. We expect 4.5% average GDP growth in other markets.

Moderate economic growth and regulatory changes, will impact revenue growth. Positively, we expect that some of the bad debts recorded last year, won’t be repeated.

Barclays Africa Group, which owns Absa in South Africa and the Barclays-branded businesses in the rest of Africa, as well as of the majority of NBC in Tanzania, has strong capital and liquidity levels and is independently funded.

Barclays Africa will continue to invest for growth in Africa and with a footprint in 12 markets, is well positioned to benefit from economic growth.