Wednesday, 2 November 2011

BARCLAYS BANK OF KENYA 9 MONTH AFTER TAX PROFIT UP 11.2% TO 6.1 BILLION







Barclays Bank of Kenya (BBK) announced its financial results for the 9 months ended September 30th 2011

Profit Before Tax rose by 26.4% to stand at Kshs. 8.9 Billion. Profit After Tax, though, was up 11.2%, at Kshs. 6.1 Billion

The profit growth was guided by a significant reduction in staff costs and a reduction in the loan loss provision

Gross Non-Performing Loans (GNPL) were down 9.8 percent resulting in GNPL/Net Loans improving by 1.1% to 5.76%

The significant reduction in expenses led in the Cost:Income ratio reducing to 54.65%, from 64.46%

During the period, BBK managed to recover previously impaired loans   


2010 vs. 2011 Analysis


2010
 Kshs.
2011
 Kshs.
% CHANGE
TOTAL ASSETS

177.1 BILLION

180.9 BILLION
+2.1%
NET LOANS AND ADVANCES
91.7   BILLION
98.9 BILLION
+7.9%
CUSTOMER DEPOSITS
127.7 BILLION
135.8 BILLION
+6.3%
 LOAN:DEPOSIT RATIO
71.78%
72.82%
+1.0%
TOTAL INTEREST INCOME
13.3 BILLION
12.7 BILLION
-4.3%
TOTAL INTEREST EXPENSE
1.22 BILLION
732 MILLION
-40%
NET INTEREST INCOME
12.1 BILLION
12 BILLION
-0.7%
TOTAL OPERATING INCOME
19.7 BILLION
19.6 BILLION
-0.9%
TOTAL OPERATING EXPENSE
12.7 BILLION
10.7 BILLION
-16%
COST:INCOME RATIO
64.46%
54.65%
-9.8%
PROFIT BEFORE TAX
7 BILLION
8.9 BILLION
+26.4%
PROFIT AFTER TAX
5.5 BILLION
6.1 BILLION
+11.2%

Total Assets grew by 2.1% to Kshs. 180.9 Billion, which is less than the 5.3% which the entire industry grew by in the 9 months to September

Net Loans were up 7.9% to Kshs. 98.9 Billion

The Bank managed to ramp up its profits in the period in no small part to the reduction in their expenses, as Total Interest Income and Total Operating Income were both down

Interest from Loans and Advances as well as Interest from Government Securities was down.



Meanwhile Interest Expenses on Customers Deposits was more than halved to Kshs. 433 Million, from 914 Million

Loan loss provision reduced by 55.7% to Kshs. 520 Million from Kshs. 1.2 Billion

Fees and Commissions declined by 7.2% to Kshs. 5.2 Billion

Foreign Exchange Trading Income was up 16.1% to Kshs. 2.1 Billion

Barclays’ decision to lay off managers at the beginning of the year led to Staff Costs decreasing by 15.1% or almost Kshs. 1 Billion

Liquidity was at a solid 47.6%, a 27.6% excess on the Minimum Statutory Ratio


Q2 2011 vs. Q3 2011 (Quarter on Quarter Analysis)


      Q2 2011
         Kshs.
      Q3 2011
         Kshs.
% CHANGE
TOTAL INTEREST INCOME
4.0 BILLION
4.9 BILLION
+24%
TOTAL INTEREST EXPENSE
232.5 MILLION
319 MILLION
+37%
NET INTEREST INCOME
3.71 BILLION
4.57 BILLION
+23.2%
TOTAL OPERATING INCOME
6.3 BILLION
7.1 BILLION
+12.4%
TOTAL OPERATING EXPENSE
3.34 BILLION
3.55 BILLION
+6.0%
COST:INCOME RATIO
53.2%
50.2%
-3.0%
PROFIT BEFORE TAX
2.94 BILLION
3.52 BILLION
+19.7%
PROFIT AFTER TAX
2.11 BILLION
2.47 BILLION
+16.9%

BBK saw a positive Q3 2011 in comparison to Q2 2011

It is however interesting to note the 37% rise in Total Interest Expense for the corresponding quarters which is will likely be replicated in the next couple  of quarters


The release of the results came hot on the heels of the decision by the Central Bank of Kenya Monetary Policy Committee to raise the Central Bank Rate by 550 basis points to 16.5% in its attempt to try to rein in inflation

This will make the rest of the year a tough period for Kenyan banks to find new lending opportunities. Economic growth is expected to cool


Barclays closed Wednesday trading down 4.62% to 14.45/=. The share though rallied 38.5% in the month of October, only being bested by Williamson Tea which rose 62% in the same month. Barclays is trading at a Price to Earnings ratio of 7.5.

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