Barclays profits jump 49% in 2016
Isaac Pinielo | Tuesday March 28, 2017 15:52
According to the bank’s recently announced financial results, the profit rise was driven by sustained revenue growth in the retail and business banking as well as the corporate and investment banking. These two segments grew by 11% and 30% respectively.
“The bank has continued to make progress in growing the key business segments in the various sectors of the economy,” managing director (MD), Reinette van der Merwe said.
The bank also registered an increase in net interest income by nine percent year-on-year, mainly driven by balance sheet growth and optimal utilisation of funding sources, which resulted in net reduction in the interest expense year-on-year by 26%.
Net fee and commission income also increased by 16% year-on-year. Van der Merwe noted that this growth was driven mainly from the retail and business-banking segment where the bank had an increase in transactional volumes and activity fees from various digital channels.
“Net trading income increased by 70% year-on-year, resulting from increased volumes from client acquisition and execution of cross sell opportunities during the year,” she said.
According to the MD, operating costs were well contained with the business achieving a cost to income ratio of 49% for the year ended 31 December 2016, compared to 55% in the prior year.
She indicated that this is in line with the bank’s continued focus on managing costs through various cost control programmes and rationalisation activities. “Our strong revenue growth equally contributed to the improved cost to income ratio. On a year-on-year basis, our impairments grew by a modest seven percent in comparison to the prior year.
This positive performance is attributable to our enhanced collections capability and conservative credit extension to high risk sectors,” Van der Merwe said.
She added that during the year management took a prudent view to accelerate recognition of retail impairments for the employees of one of their mining clients, noting that removing the impact of this significant event, their impairments would have reflected a year-on-year reduction of 50%.
“Consequently on a normalised basis our overall loan loss rate would have been at 1.2% in comparison to the previous year’s loan loss rate of 2.4%. Due to acceleration of provisions for impairment, our loan loss rate was 2.7% compared to 2.4% in the prior year,” she said.