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UPDATE 2-Barclays Kenya eyes income growth from Absa tie-up
February 13, 2013 / 6:36 AM / 5 years ago

UPDATE 2-Barclays Kenya eyes income growth from Absa tie-up

* Year pretax profit up 8 pct to 13 bln shillings

* Increase attributed to lower loan loss provisions

* Integration with Absa could lead to higher income

NAIROBI, Feb 13 (Reuters) - Barclays Kenya expects to grow income by drawing on the resources and experience of Absa Group after the two businesses are integrated, the incoming head of the Kenyan business said on Wednesday.

Parent company Barclays decided to merge its Africa operations last year to increase the share of profit from the operation, which accounts for about 8 percent of the British bank’s global business.

“The integration with Absa as we move forward is going to bring new capabilities which we are going to be able to leverage ... to drive future income growth,” Jeremy Awori told reporters after an investor briefing.

The bank’s 2012 pretax profit grew 8 percent to 13.0 billion shillings ($148.8 million) after it reduced loan impairment charges 80 percent to 144 million shillings.

Its shares fell 1.8 percent to 16.20 shillings.

“The results were consistent with what they have done in the last few years which is a conservative strategy of managing risk,” said Judd Murigi, an analyst at African Alliance.

Kenyan lenders have posted good growth in recent years with collective industry profit jumping 20.4 percent to 89.3 billion shillings in 2011, according to the central bank.

Barclays Kenya’s low-risk appetite has been blamed by analysts for its slower pace of earnings growth compared with local lenders such as Equity Bank and Kenya Commercial Bank.

“The numbers were very defensive. The bank’s model is not a high growth model,” said Aly Khan Satchu, an independent trader and analyst. Both Equity and KCB routinely post high double-digit profit growth.

Mohamed said he expected the bank to benefit from the integration with Absa but ruled out a radical change to strategy. “The risk philosophy and portfolio is not going to change. If the macro-environment changes for the better, then you will see us do more business” he told reporters.

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