Barclays Bank ‘financially stable’

 

Barclays Bank Tanzania managing director Kihara Maina cuts a ribbon to launch a loan collection unit in Dar es Salaam in October last year. PHOTO|FILE 

By  The Citizen Reporter

In Summary

• It is safe from any risks that could emanate from borrowers’ failure to honour their obligations, it has explained.

Dar es Salaam. Despite having a huge burden of bad debts and doubtful loans, Barclays Bank Tanzania is financially stable, the Bank of Tanzania (BoT) says.

It is safe from any risks that could emanate from borrowers’ failure to honour their obligations, it has explained.

It maintained that the lender was operationally secure and sound financially because its non-performing loans (NPLs) had not reached alarming levels, which sector sources put at 10-15 per cent of total lending.

At the end of the third quarter, the NPL ratio in Barclays’ credit books was 7.3 per cent compared with 8.7 per cent in June and 8.8 per cent for the first three months of this year.

The head of banking supervision at the central bank, Mr Agapiti Kobello, said it was normal in lending business to have NPLs provided the doubtful loans were within acceptable levels.

According to him, the regulator has been closely watching the NPLs at Barclays and other banks and financial institutions in the country.

“BoT has required all banks with non-performing loans above five per cent to put in place strategies aimed at reducing their non-performing loans to below five per cent,” he told The Citizen on Sunday recently.

“The general level of non-performing loans in the banking sector has been gradually improving as indicated by the current industry non-performing loans ratio of 7.13 per cent as of September 30, 2013.”

BoT also said Barclays Bank’s credit deposit ratio (CDR) was still within acceptable limits; having not hit the maximum cap set on loaning, which is 80 per cent of total deposits.

However, the latest financial statements of the bank showed that the CDR, which is also called the loan deposit ratio (LDR), has reached almost 78 per cent.

That ratio calls for lending vigilance, which Barclays has been doing, and it is an alarming rise compared with the LDRs of around 73 per cent and 68 per cent in the second and first quarters of this year respectively.

At the end of the third quarter, its loans portfolio was worth nearly Sh349 billion compared with Sh360 billion at the end of June and that was against customers’ deposits of Sh446 billion and Sh436 billion for the two periods respectivel