Barclays posts 3.1pc growth in profit to Sh2bn as bad loans bite

Corporate News

A Barclays Bank branch on Muindi Mbigu Street in Nairobi. PHOTO | FILE 

By GEOFFREY IRUNGU, girungu@ke.nationmedia.com

In Summary

• The bank made Sh2.18 billion in after-tax profit in the period ending March 31 just as its loan loss provisions rose to Sh798 million from Sh351 million last year.
• Even though it did not reveal what was behind the massive increase in NPLs, the move comes against the CBK's more aggressive quest for operational prudence where banks are supposed to more realistically recognise dud loans and provide for possible losses.
• Analysts however noted that the bank had delivered high growth in the loan book while its cost-to-income was down.

Barclays Kenya registered a 3.1 per cent growth in net profit in the first quarter of this year compared to the same period last year, as it more than doubled its provisions for losses arising from nonperforming loans (NPLs).

The bank made Sh2.18 billion in after-tax profit in the period ending March 31 just as its loan loss provisions rose to Sh798 million from Sh351 million last year.

The provisions for losses came as the NSE-listed lender saw its gross NPLs rise by a significant Sh2.6 billion or 47.9 per cent to Sh7.9 billion in the quarter compared to last December.

Even though the bank did not reveal what was behind the massive increase in NPLs, the move comes against the Central Bank of Kenya's (CBK) more aggressive quest for operational prudence where banks are supposed to more realistically recognise dud loans and provide for possible losses.

READ: KCB quarter one net profit rises 6.1pc to Sh4.63bn as bad loans surge

Analysts however noted that the bank 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.

Staff costs stood at Sh2.45 billion from Sh2.3 billion while rental charges also rose to Sh323.9 million from Sh275.3 million from the same period last year.

While total operating income rose to Sh7.99 billion from Sh7.37 billion, the total operating expenses were also up to Sh4.95 billion from Sh4.25 billion.