Barclays Bank Remains Cautious

BARCLAYS Bank (Zimbabwe), one of the few foreign-owned banks targeted by government under the controversial indigenisation crusade, says it will maintain a cautious lending regime, despite previous criticism it shunned exposure to the country's indigenous businesses. In a statement accompanying results for the half-year to June 30, 2012, Barclays managing director, George Guvamatanga, said the bank would maintain a prudent lending regime underpinned by steady growth.

"Barclays will continue to drive a safe banking model which is underpinned by a robust risk management framework," said Guvamatanga.

He said growth in loan advances was expected to become more evident during the current reporting season as utilisation of marked facilities increased and new loan pipeline were processed.

During the half year period, Barclays said its lending was improving, with marked facilities increasing from US$78 million as at December 31 last year to US$89 million as at June 30 this year.

"During the period under review, we advanced loans of US$60,6 million to the productve sectors of the economy and to some of our retail customers. This represents an increase of 13 percent from US$53,7 million in the previous year," Guvamatanga said.

The bank's earnings for the half year reflected a slight decline in profit before tax of US$831 000, from US$910 000 the same period last year. Underlying costs went up by 14 percent year-on-year compared to underlying income growth of 13 percent.

"Costs include the effect of a number of projects undertaken during the first half whose benefits extend into the second half of the year," he said.

Guvamatanga said increase in specific provisions largely influenced by the timing and magnitude of the growth in the loan portfolio explains the slight decrease in profit after tax.

The bank recorded a profit after tax of US$471 000, from US$732 000 during the same period last year, translating to earnings per share of 0,02c cents, from 0,03c.

The bank however says it will continue to focus on ensuring deposit concentration risk stays under control especially in the prevailing market in which the largest portion of customer liabilities is demand deposits.

"Your bank remains capitalised well above current regulatory benchmarks. The capital adequacy ratio closed at 19 percent compared to the regulatory minimum capital adequacy ratio of 10 percent," said Guvamatanga.

He said risk weighted assets had increased in line with increases in advances and the bank forecasts that the capital adequacy ratio will remain compliant under the projected business growth.