Barclays Africa Earnings Boosted by Investment-Banking Unit

Barclays Plc (BARC)’s South African unit said first-half profit climbed 10 percent after investment-banking earnings increased and credit impairments fell.

Net income rose to 6.17 billion rand ($582 million) in the six months through June from a restated 5.59 billion rand a year earlier, Johannesburg-based Barclays Africa Group Ltd. (BGA) said in a statement today. Earnings per share excluding one-time items increased to 7.21 rand.

Profit from investment banking jumped 30 percent to 1.1 billion rand, led by an increase in fixed income and credit and the South African bank’s business in the rest of the continent. That contrasted with a 50 percent plunge in investment-banking earnings at London-based Barclays, which owns 62.3 percent of the lender. Barclays has said the company is placing more focus on its African unit, which is exempt from a plan to cut a quarter of employees at its investment bank.

“Investing in corporate banking across the continent is paying dividends,” Barclays Africa Chief Executive Officer Maria Ramos said in a statement. “Growth outside of South Africa has been strong and this portfolio now constitutes 20 percent of group revenue which is already within the range we have set as a target for 2016.”

Nigerian Target

Barclays Africa bought most of its U.K. parent’s African operations for 18.3 billion rand last year to boost earnings. Owning its parent’s operations in Egypt and Zimbabwe “remains an ambition for us,” Ramos said on a conference call today. Expansion in Nigeria also remains a goal, she said.

In its home market, Barclays Africa is spending money to refurbish branches, install cash machines and upgrade technology after South Africa’s third-biggest lender lost clients to competitors. Customer numbers in Africa’s second-biggest economy fell 7 percent to 9.2 million this year, the bank said.

Barclays Africa fell 1.9 percent to 169.10 rand by the close in Johannesburg. The stock has climbed 28 percent this year, the best performer on the seven-member FTSE/JSE Africa Banks Index, which gained 17 percent over the period.

“We expect stronger growth in the Barclays Africa Group markets beyond South Africa, despite fiscal and external account challenges in some of the larger economies,” the bank said in the statement. “We expect mid-single digit loan growth in South Africa this year. Our net interest margin should widen, given rising interest rates in South Africa, while our credit-loss ratio is also likely to improve slightly.”

The company declared an interim dividend of 4 rand.

Barclays, the U.K.’s second-largest bank by assets, returned to a profit in the second quarter, helped by lower provisions and cost cuts. Earnings at its investment bank slumped to 567 million pounds ($961 million) as it made less money from equities and currencies.

To contact the reporter on this story: Renee Bonorchis in Johannesburg at rbonorchis@bloomberg.net

To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net Dylan Griffiths, Vernon Wessels

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