Barclays exercises more caution in lending
Isaac Pinielo | Tuesday September 26, 2017 15:36
While borrowers have not cut down on loan demands, the bank says it has become more prudent, resulting in an overall marginal drop in customer loans and advances during the half-year ended June 30, 2017.
For the period under review, the bank’s loans and advances decreased by 0.32% to P9.96 billion from P9.99 billion in the corresponding period last year.
Barclays managing director (MD), Reinette van der Merwe said the continued modest growth in household incomes as well as restrained economic expansion call for continued caution while exploring opportunities within the chosen segments.
“On a segment level we continue to realise exponential growth in our business banking segment, which continues to outperform expectations on an annual basis,” she said.
According to van der Merwe, the bank’s retail segment has remained generally unchanged due to the caution in lending.
However, she said they have begun to see a steady build up in momentum for the corporate business, as they start converting new business opportunities in the third quarter of the year, in various key sectors of operations.
Despite the early settlement of a significant corporate loan towards the end of 2016, the MD said they have managed to rebuild their balance sheet position through the execution of key transactions, and as such maintained the asset position year-on-year.
On an overall basis, van der Merwe said the quality of the loan book has remained strong with loan loss rates remaining stable in comparison to the previous year.
As the bank focuses on driving efficient balance sheet utilisation, van der Merwe said the bank has been able to register a growth of nine percent year-on-year on the customer liabilities.
“The growth realised is above market average growth, which increased by one percent as at June 2017,” she said.
In addition, she said the growth in deposits was mainly driven by growth in short term funding through current and savings accounts.
She further stated that managing funding risk continues to remain at the core of the business, adding that the strategy is focused on optimising cost of funding by ensuring a reasonable mix between short term and long term funding. Meanwhile, she said performance for the first half of the year has mainly been driven by muted revenue growth across segments except for the business banking segment that registered a five percent income growth year-on-year.
Costs and impairments remained stable in comparison to the previous year.
She said net interest income remained relatively flat year-on-year driven partly as a result of the interest rate cut applied in August 2016, as well as competitive pricing to attract both deposits and assets.
Net fee and commission income increased year-on-year by seven percent.
“This growth was driven mostly by our retail and business banking segment,” van der Merwe said.