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4-Traders Homepage  >  Equities  >  London Stock Exchange  >  Barclays PLC    BARC   GB0031348658

Delayed Quote. Delayed  - 05/31 09:40:05 am
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05/30 BARCLAYS : provision for bad loans doubles
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05/28 BARCLAYS : rules out financing SMEs during current period
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Barclays : provision for bad loans doubles

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05/30/2016 | 06:01am CEST

Barclays Kenya provisions for loan losses doubled while those of Commercial Bank of Africa (CBA) rose nearly five-fold, eating into the two lenders' profit for the first quarter of this year.

Barclays, one of Kenya's top five banks by assets, reported a 3.1 per cent growth in net profit to Sh2.18 billion in the first three months ended March compared to the same period last year, as it more than doubled its provisions for losses arising from non-performing loans (NPLs).

The bank's loan loss provisions rose to Sh798 million from Sh351 million last year. The gross NPLs rose by a significant Sh2.6 billion or 47.9 per cent to Sh7.9 billion in the quarter compared to last December.

CBA made 40.6 per cent more in net profit in the first quarter compared to the same quarter last year, but its loan loss provision jumped nearly five times to Sh947 million from just Sh205.1 million in the same period last year.

The lender would have nearly doubled its net profit for the quarter had its loan provision remained the same as last year.

The group's gross NPLs rose by 54.2 per cent to stand at Sh10.8 billion, underlining the extent to which bad loans had impacted adversely on its revenues.

The two banks did not reveal the reasons behind the massive increases in NPLs, which comes at a time when the Central Bank of Kenya (CBK) has taken a more aggressive quest for operational prudence where banks are supposed to more promptly recognise dud loans and provide for possible losses.

READ: CBK set to penalise banks that understate bad loans for profits

Analysts however noted that Barclays had delivered high growth in the loan book while its cost-to-income was down.

"(A) key positive (was) better than expected growth in loans, 21.7 per cent year-on-year and 4.9 per cent quarter on quarter; a 15.4 per cent year-on-year growth in NIR (non-interest revenue), a key departure from other tier-1 banks that have mostly recorded flat or lower NIR; 100 basis points year-on-year decline in CTI," said Standard Investment Bank in an analysis on BBK.

SIB forecast that over the next four years, BBK would keep the CTI (cost-to-income) ratio at between 51 and 52 per cent.

"Our expectation is management's risk appetite, mainly set by Barclays Plc, will endeavour to match revenue and cost growth – we don't expect to see significant cost accumulation as management chases after future growth," said SIB.

CBA's net profit stood at Sh1.16 billion compared to Sh827.9 million in the same period last year, while the total operating income hit Sh4.49 billion, up from Sh3.3 billion last year.

The net interest income grew by 38.9 per cent to Sh3.4 billion, up from Sh2.46 billion in the same period last year.

(c) 2016 Nation Media Group. All Rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info)., source Middle East & North African Newspapers

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