Barclays has new spring in step, says Maria Ramos
Energy and excitement has replaced the ennui at Barclays Africa after Barclays plc’s sale of its majority stake in the group, says CE Maria Ramos.
The sell-down "puts us in a position [to] make our own choices", an upbeat Ramos said on Friday, delivering the group’s maiden results since Barclays plc sold its 33.7% stake.
"For the first time in nearly nine years, I have one boss," she said, referring to board chairwoman Wendy Lucas-Bull.
For the six months to June, Barclays Africa grew normalised headline earnings 7% on the previous comparable period to R7.7bn.
Revenue was flat, but earnings were buoyed by a drastic improvement in bad-debt losses, on better credit performances in its business and corporate and investment banks.
Earnings in its South African retail and business bank fell 9%, to R4.2bn, due to weak growth in its transactional and deposit franchise.
Most of Barclays Africa’s earnings came from retail and business in SA. This had disappointed in the past 18 months, said Harry Botha, an analyst at Avior Capital Markets. Absa needed to improve its service and product offerings. An increase in its credit risk appetite, which Barclays plc had constrained, could also help to attract more customers, he said.
Positively, this unit was the least affected by the separation from Barclays plc, Botha said.
Barclays plc announced its intention to sell its then 62.3% stake in Barclays Africa on March 1 2016. It sold 12% into the market in 2016, before offloading a further 33.7% in an overnight sale on May 31.
Barclays Africa would continue to focus on its retail and business bank in SA; its wealth, investment management and insurance division; and opportunities in the rest of Africa, Ramos said.
Retail bank customers in SA fell 3% to 8.6-million in the period. Products such as Absa’s Gold Value Bundle account and investments in marketing and training of branch staff were expected to bear fruit, said chief financial officer Jason Quinn.
While there is no longer uncertainty over its future ownership, Barclays Africa must still face Public Protector Busisiwe Mkhwebane in court. She has recommended that R1.125bn be recovered from Absa for an apartheid-era bail-out of Bankorp, which Absa later bought. Absa had approached a court to set this aside and felt confident about the process, Ramos said.
Despite the share being down 14.68% in 2017, eight analysts have a buy rating, four a hold and one a sell on the stock. The 12-month consensus target price is R163.28. "The stock is unloved relative to peers, and there could be some operational recovery," Botha said.