Rebranding costs took a toll on Barclays Bank Kenya’s profits as the lender transits to adopt the Absa brand.
Last year, Barclays Africa changed to Absa Group after severing ties with Barclays.
Kenya is set to fully adopt the Absa brand by June 2020.
The Kenyan outfit which announced its results for the year ended December 31, 2018 said it incurred a transition cost of Sh270 million, majorly on customer awareness during the period under review.
"Rebranding is an expensive affair. One off costs slowed our profits. We expect to spend more on this initiative in the coming financial year to 2020,’’ Barclays Bank Kenya chief executive Jeremy Awori said.
Despite the operating costs which grew to Sh17.1 billion from Sh16.7 billion in 2017, the bank made a seven per cent increase in net profit.
According to the bank chief finance officer Yusuf Omari, net profit adjusted for one-off-costs was 7.68 billion, meaning the bank could have reported a net profit of 11 per cent, one of the highest in the decade.
The bank’s asset book grew by a whopping 20 percent to Sh324.8 billion. It is now breathing on the neck of Co-operative Bank which the third largest bank in the country after KCB and Equity with total asset value of 386.8 billion as at May last year.
The planned merger between NIC and CBA banks which have total asset value of at least Sh444.3 billion however threatens to outdo both Cooperative and Barclays Bank Kenya.
The tier-one lender closed the year with a loan book of Sh177.35 billion, a five percent jump from the previous year, while customer deposits increased 11.5 percent to Sh207.4 billion.
The lender’s gross non-performing loans increased by Sh1.8 billion the equivalent of 14.88 percent to Sh13.9 billion in the period from Sh12.6 billion the previous year as its loan loss provision, booked as an expense in the income statement, jumped 24.2 per cent to Sh3.87 billion.
The bank blamed the high debt impairment to slow business activities to unfavorable business environment caused by prolonged election cycle last year and adoption of new accounting standards, IFRS9 that require loan provisioning.
We have fully adopted the IFRS9 accounting system. This saw our loan loss rate grow to 2.2 percent from 1.8 percent. The new system will instill financial discipline in the market,’’ Awori said.
