BARCLAYS AFRICA GROUP kicked off the banking results season with Maria Ramos the Group Chief Executive Officer addressing the entire operation on performance. Ramos not only announced financial performance today but unveiled a totally new double digit growth strategy in addition to new corporate identity after a successful sell down process dubbed the ‘Barclays London divorce’.
“Our overriding goal is to become a banking group of which Africa can be proud, a forward-looking African business that recognises our African heritage, rooted in Africa, with global reach. We have a clear and undiluted ambition to double our market share of African banking revenues to 12%, It is a bold plan for growth” Mariah Ramos said.
“Growth has to be an essential part of our DNA, the driver behind our every action and a core facet of our ambition for this business. Sustainable growth is fundamentally about culture. We are building our culture around a shared sense of purpose and identity, a celebration of our diversity and inclusion, a passion for growth- helping our colleagues bring their possibility to life.
A priority for Barclays Africa is to restore leading positions in core business areas, while expanding into new markets, enabling the group to deliver double-digit growth.
The Group will expand its corporate and investment banking unit to certain international jurisdictions, with offices set to open in London and later in New York, trading as Absa Securities, and offering opportunities for our clients to financial markets offshore, and providing access to corporates and institutions seeking to invest in Africa.
As an independent and stand-alone business, Barclays Africa will have the agility, the means and the risk appetite to strive for growth, said Ramos.
“This is an exciting time for us. The sell-down has provided us with the headroom to reinvigorate our company while building on the proud heritage Barclays has in Africa. We will work hard to deliver on our new strategy and to build our reputation as a bold, trusted, innovative and customer-focused brand.
Barclays Africa group is building a scalable, digitally led business, passionate about innovation, Ramos said.
Barclays Africa Group Limited announced today that it will be renamed Absa Group Limited in due course and trade as Absa across its operations (currently branded Barclays) in Africa, pending shareholder and regulatory approvals.
“The sell-down gave us the opportunity to roll out a brand that reflects our identity in Africa and to unite our operations in 10 countries behind one name,” Ramos said. “We will be Absa, not as you know it, but relaunched, re-presented and with an identity fit for the new and forward-looking business we are creating.”
Absa is currently the brand of the Barclays Africa Group’s South African business. The Absa brand has substantial equity as one of the largest banks in South Africa and enjoys recognition in many of the countries in which Barclays Africa operates under the Barclays brand currently.
Barclays Africa Group undertook extensive research internally and externally, in a process that included more than 130,000 conversations with employees and stakeholders about the brand and strategy of the Group.
“The implementation of this decision necessitates that we take into account practical considerations and dynamics in each market so that it is as seamless as possible. The change will be rolled out in time, bearing in mind the mid-2020 rebranding deadline. This transition will be undertaken with the utmost care,” said Peter Matlare, Deputy CEO.
“We are re-setting our business with a bold, new growth strategy that leverages our existing footprint and market insights,” Ramos said. “The new identity is further evidence of the scale of the transformation and change in our business – a new brand for a new banking group,” Ramos said.
Bullish earnings as credit impairments narrow – post sell down
FY2017 BAGs headline earnings rose 4% to R15.6billion as income (contribution) ticked 1% higher to R72.9billion. Credit provisioning narrowed 20% allowing the bank to generate an ROE – Return on equity – of 16.4% a marginal decline from 2016s 16.6%. However, the bank suffered slow economic expansion in key markets such as South Africa which accounts for 80% of BGSs income. South Africa’s economic challenges impacted the entire banking industry as a consequence of the rating downgrades which increased the cost of doing business. The ZAR1.2trillion balance sheet group still remains capital adequate and is highly liquidity providing sufficient buffer to its customer deposits. The groups Cost to Income ratio rose 1.6% to 56.8% from 55.2% in 2016. Despite the challenges BAG was still able to increase its dividend by 4% to ZAR1,070 per share.
BAGs – South African Retail and Business Banking division contributed 58% of the groups income and 62% of its headline earnings while the Rest of Africa – ROA division accounted for 21% of income and headline earnings. BAGs RBB division grew income nearly 2% to R42.7bn and headline earnings 0.6% to R8.9bn. ROA income declined 2.7% to R15.6bn while its headline earnings contribution grew 7.2% to R3bn. The rand strengthening against African currencies caused the decline in income from this division from a revaluation effect point of view which cost the group 3%. If not for the stronger rand, the rest of Africa’s headline earnings growth would have been 24%.
Barclays Africa Group’s separation from Barclays PLC is progressing well and the parties continue to work together to ensure a seamless separation.