Barclays Bank of Kenya managing director Jeremy Awori during an investors briefing and the release of the bank's half-year results at the Intercontinental Hotel in Nairobi on August 12, 2014. PHOTO | SALATON NJAU | NATION
What you need to know:
Barclays will focus on lending to SMEs that offer higher margins compared to its large corporate customers that currently account for the bulk of its loans.
The bank is also seeking lending opportunities in the nascent and capital-intensive oil and gas sectors besides financing projects in the energy industry.
The bank’s hitherto conservative lending had seen it trail double-digit credit growth in the industry where indigenous lenders KCB and Equity have overtaken the foreign-owned institution in profitability and asset size.
Barclays Bank’s loan book expanded by 20 per cent to Sh128.4 billion in the three months between March and June, signalling a strategic shift for the lender that had in recent years scaled down its lending in sharp contrast to the industry trend.
Half-year data released Tuesday showed Barclays Kenya advanced Sh11.6 billion in only three months, helping to reverse a drop in the first quarter of the year during which the bank’s loan book shrank from Sh118.3 billion in December to Sh116.7 billion as at the end of March.
“We’re not complacent; we want to grow our loan book in the promising sectors,” said Barclays chief executive Jeremy Awori at a press briefing Tuesday.
The quick growth saw the bank’s loan book hit a new high from the previous peak of Sh108 billion in 2008.
The bank had adopted a more conservative stance, avoiding new loans to sectors such as real estate and SMEs in the past five years.
Barclays had also drafted more stringent credit approval processes for big-ticket loans that had to be sanctioned by its executives in London and Dubai.
This has, however, changed with the consolidation of Barclays’ African subsidiaries that now report to its South African unit, Absa, which has showed an inclination for a higher risk appetite.
Mr Awori said Barclays will focus on lending to SMEs that offer higher margins compared to its large corporate customers that currently account for the bulk of its loans.
The bank is also seeking lending opportunities in the nascent and capital-intensive oil and gas sectors besides financing projects in the energy industry.
Barclays recently head hunted Standard Chartered Kenya’s general manager for SMEs, Humphrey Muturi, to help drive its loan book among mid-sized firms.
Mr Awori said the bank is setting up a mortgage desk to grow its presence in the booming real estate sector where KCB and Housing Finance are the biggest players.
Barclays is also establishing an investment banking desk to grow fees from advisory services as firms seek to raise funds, make acquisitions or enter into mergers.
The lender said the investment banking arm “will allow us to diversify into transactional services such as debt and equity capital markets as well as mergers and acquisitions.”
The bank’s hitherto conservative lending had seen it trail double-digit credit growth in the industry where indigenous lenders KCB and Equity have overtaken the foreign-owned institution in profitability and asset size.
Gross loans advanced by Kenya’s 43 banks have more than doubled from Sh670.3 billion in 2008 to Sh1.5 trillion last year, growing between 12 per cent and 30 per cent annually.
Barclays is betting on its newfound lending appetite to boost performance in the second half.
Barclays did not declare an interim dividend citing the need to preserve cash as it moves to comply with higher capital adequacy ratios set by the Central Bank of Kenya.
The bank’s management said they nevertheless expect to maintain the full year dividend payout at 50 per cent of the net profit. It paid shareholders a total dividend of Sh0.7 per share for the year ended December 2013, including an interim dividend of Sh0.20.
