Barclays sets eyes on oil, gas sector to boost its earnings

A Barclays Bank of Kenya shareholder asks a question during the bank's annual general meeting in the past. The bank is betting on the energy sector to boost returns as part of a three-year strategy. PHOTO|FILE.   NATION

In Summary
The bank has been retained to act as a lead advisory to the Kenya Electricity Generating Company as it seeks to raise funds to finance energy projects.
The bank has been taking a beating on the retail segment of the business from its Kenyan-grown competitors, Kenya Commercial Bank (KCB) and Equity Bank.



 By Nation Reporter
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Barclays Bank of Kenya is betting on the energy sector to boost returns as part of a three-year strategy announced Wednesday.

In a statement sent to newsrooms Wednesday, the bank said it would revive its investment arm to help it play a key role in financing projects in the nascent energy, oil and gas sectors.

The bank has been retained to act as a lead advisory to the Kenya Electricity Generating Company as it seeks to raise funds to finance energy projects.
It is also funding the acquisition of an oil rig by UK-based Marriot Drilling Africa Ltd.

“BBK is trying to take advantage of growth opportunities in the region. Oil and gas is especially lucrative given the recent discoveries in East Africa,” said AIB Capital analyst, Mr Ronald Lugalia.

Discovery of oil in Kenya was first made public last year.

Since then, heightened activity by oil explorers has seen estimates of the country’s oil reserves increase five-fold. Uganda and Tanzania are also nurturing oil and gas sectors while South Sudan is one of the biggest oil producers in the region.

Capital needs

The capital needs by the sector far exceed what local banks can meet and this has drawn the attention of regional and global financial institutions.
Barclays has also indicated that it will be revamping its investment banking in order to offer more comprehensive financial services to customers who have interests in the capital markets.
For middle and low income customers, the bank plans to offer more attractive credit terms.  The bank said it had waived insurance fees on unsecured loans and is now extending a three-year fixed rate mortgage. The firm said it will use Internet and mobile technology more.

in delivering banking solutions.

Barclays says that it will also customize services targeted at the SME market as well as venture into banc assurance.

“Barclays Bank of Kenya will work very closely with its customers to tailor suitable products and services for specific market segments,” the firm said in a statement.
The bank has been taking a beating on the retail segment of the business from its Kenyan-grown competitors, Kenya Commercial Bank (KCB) and Equity Bank.

Barclays Kenya reported a 13 per cent drop in net profits in its half-year profits to Sh3.73 billion.

Although profitability was weighed down by a one-off payment to retrenched workers, analysis indicates the bank has been experiences relatively slower growth in comparison to home-grown banks, some of which have been posting double-digit growth.