Barclays Bank’s Absa transition costs hit Ksh.910 million

Barclays Bank’s Absa transition costs hit Ksh.910 million

Barclays Bank Kenya transition costs into the Absa brand have hit Ksh.910.3 milion in nine months to September 30 to weigh down on the lender’s net earnings in the period.

The costs, which are linked to additional investments in technology and brand modernization, hit Ksh.910.3 million between July and September, adding to the cumulative expense of Ksh.243.4 million and Ksh.317.4. million in the preceding two quarters.

As such, Barclays’ nine month earnings were weighed down by the one-off transition costs to see net profit after tax (PAT) rise marginally by 3.7 percent to Ksh.5.6 billion from Ksh.5.4 billion last year.

Even so, the bank’s underlying fundamentals remained solid to see the retention of shareholders earning per share at Ksh.1 from the same period last year.

“Adjusting this number, the normalized profit after tax is Kshs 6.2 billion; a 14 percent growth from the previous year. The bank will use the normalized profit in making its decision on dividend and therefore exclude the impact of the one-off costs for separation,” noted the bank in a statement issued on Wednesday.

“The bank is upgrading to more advanced systems which will ultimately help enhance the service experience. Over the next few months, Absa’s warm and vibrant red color palette will be introduced to the branches, ATMs and other assets.”

Barclays’ operating income in the period came in at Ksh.24.8 billion on the back of a rise in both interest and non-funded income (NFI) by 5.5 and 1.8 percent respectively.

Net loans and advances to customers rose by 8.9 percent to Ksh.194.2 billion as customer deposits similarly rose to Ksh.235.4 billion from Ksh.220.2 billion in the first three quarters of 2018.

Barclays managed to grow its top line without sacrificing additional expenses as the Group held down costs by a further five percent year over year to Ksh.12.6 billion.

The bank was however forced to incur an additional Ksh.300 million in loan loss provisioning as the lender faced up to increased loan impairments.

Barclays net non-performing loans however fell by a substantive 30.2 percent to leave the bank’s average loan-loss ratio at a low 1.5 percent.

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