Barclays trails KCB and Equity in profit

BARCLAYS Bank Kenya has announced an 18 per cent growth in its half year profits before tax of Sh6.3 billion attributing this to a prudent cost management strategy. However it still trails Kenya Commercial Bank which posted a pre-tax of Sh8.5 billion and Equity's Sh7.6 billion. Barclays was helped by a Sh10 billion growth in the loan book which saw interest income rise to Sh10.6 billion, up from Sh7.8 billion, a 35.8 per cent growth.

Total non interest income including fees and commissions dropped to Sh4.7 billion, down from Sh5 billion as the bank maintained a zero charge policy on ATM transactions. For the period, the bank's operating expenses only grew by 3 per cent to Sh7.3 billion, up from Sh7.1 billion reported in the first half of 2011.

A high interest rate environment in the period saw the bank's interest expenses on deposits rising five times from Sh251 million to Sh1.2 billion due to customers' demand for high returns on their savings. This notwithstanding, some customers transferred their deposits from the bank in search of higher returns, a move that saw the bank's customer base falling from Sh128 billion to sh122 billion.

Managing director Adan Mohammed said the bank has started an aggressive low-cost deposit mobilisation strategy that includes the ongoing “Mega millionaire campaign”. Suprisingly, the bank drastically reduced its investment in government securities by close to Sh21 billion. The stock of government securities fell to Sh35.9 billion, down from Sh56.8 billion.

Mohammed said the bank had withdrawn some of its cash from government papers to enable it pay out dividends and increase customer lending as deposits fell. “We have to make sure we book and take calculated risks,” said Mohammed during an investor briefing. For the period, Barclays asset base fell to Sh168 billion, down from Sh176 billion. The bank said growing income and further cost cuttings will remain key priorities in the second hald of the year.