Nairobi, March 4, 2016… Barclays Bank of Kenya has today announced a profit after tax of KES 8.4 bn for the year ended 31 December 2015. During the period under review, the bank registered a 16% growth in net customer assets.
Investments made in new revenue generating streams such as Bancassurance, mortgage and SME saw the bank’s total income grow fourfold compared to the previous year, an endorsement of the bank’s diversification strategy. SME, which the bank has identified as a key growth pillar, grew its lending book by 27% year –on- year.
This year’s growth was impacted by volatility in the macroeconomic environment as a result of fluctuating interest rates and a weakening shilling which had an effect on the bank’s trading book. This is in addition to an increase in impairment charges due to external shocks and a reduction in margins due to the rising cost of funds.
“In the last three years, we have invested heavily in new businesses in a move aimed at diversifying our revenue generating streams so that we can wean the business performance from a reliance on cost management. Whilst it’s still too early for some of these businesses to make a significant impact on our income, they are all showing signs of growth and the bank is therefore confident that they will soon pay off,” said Mr. Jeremy Awori, Managing Director, Barclays Bank of Kenya.
Notable highlights of the financial results for the year include:
- Total interest income grew by 10% to KES 25bn on the back of growth in interest earning assets.
- Net customer assets increased by 16% to KES 145bn (2014: KES. 126bn)
- Customer deposits maintained at KES 165bn
- Capital adequacy ratio remained strong at 18.4% against a regulatory limit of 14.5%
- Liquidity ratio of 34.1% remained strong against the regulatory minimum of 20%
Other Highlights include:
Net interest income increased by 4% to KES 20.4 bn up from KES 19.6 bn in the same period last year. The growth in net interest income was impacted by a 46% rise in interest expense arising from 70 basis points increase in cost of funds. Unexpected fluctuations in interest rates in the market led to a significant mark to market loss on government securities. However, new revenue streams such as Bancassurance pushed non-interest income up by 4% to KES 9.1bn. Total Operating Income rose by 4% to KES 29.5 bn compared to KES 28.2 bn in the same period last year.
Balance Sheet Growth
Total assets went up by 7% to KES 241bn up from KES 226bn. A key contributor to this growth was the 16% increase in customer assets. The launch of centres of excellence (Mortgage and Asset Finance) coupled with the diversification agenda catalyzed this growth. Customer deposits were maintained at KES 165bn to manage the rising cost of funds.
Despite the rising trends of non-performing loans in the industry, the bank’s ratio of gross non-performing loans to gross loans at 3.6% is below industry trends. However, the loan loss rate went up marginally by 10 basis points to 1.2% from 1.1% in 2014. We have taken a cautious approach to our impairment and made provisions for our exposure to the banks that have been placed under statutory management.
The capital adequacy ratio for the bank as at end of December was 18.4% which was significantly higher than the 14.5% prescribed by CBK meaning that the bank is well capitalised to support future balance sheet growth.
The liquidity ratio is strong at 34.1% compared to the regulatory minimum of 20%. This position provides us with a strong base to meet our customers’ needs.