Lower costs drive Barclays Kenya to 10pc net profit growth

Barclays Bank of Kenya recorded a 10 per cent net profit growth in the year ended December, helped by lower costs.

It made a net profit of Sh8.3 billion in the period compared to Sh7.6 billion the year before, with the lender raising the dividend pay-out to Sh1 per share from the previous Sh0.7.

The performance was largely driven by the Sh788.2 million the bank spent to retrench 170 employees in 2013, a one-off expense item whose absence last year contributed to the profit growth.

Barclays’ loan book rose 5.9 per cent to Sh125.4 billion, helping to increase interest income 7.7 per cent to Sh22.9 billion.

Interest expenses rose sharply by 36.9 per cent, reflecting the expansion of customer deposits by Sh13.6 billion to a cumulative Sh164.7 billion.

Barclays’ non-interest income, including fees charged on transactions, declined 4.1 per cent to Sh8.6 billion. This weighed down interest earnings and saw total operating income grow marginally at 1.3 per cent to Sh28.2 billion.

The bank’s operating expenses, including staff costs, remained flat at Sh16 billion.

Three days ago, the bank’s ultimate parent, Barclays Plc announced mixed results with a net loss after tax of £174 million (Sh24.4 billion, $268 million) for 2014 compared with a net profit of £540 million the previous year.

It has set aside £1.25 billion “for ongoing investigations and litigation relating to (accusations of rigging) foreign exchange (markets)”, including £750 million for the final quarter of 2014, the bank said in an earnings statement

Barclays had announced in October a provision of £500 million for any eventual costs and fines linked to the probes.