Barclays Africa Group, South Africa’s No.2 lender by market value, reported a 4 percent rise in annual profit on Thursday, thanks to a substantial decline in impairments. Normalised diluted headline EPS, the primary measure of profit in South Africa that strips out one-off items, came in at 1,837.7 cents in the year ended December compared with 1,769.4 a year earlier.
Net interest income, an important gauge of lending profitability, inched up 1 percent to 42.32 billion rand, while net interest margin was unchanged at 4.95 percent.
Credit impairments fell 20 percent to 7.0 billion rand, Barclays Africa said. Credit impairments occur when there has been a deterioration in the creditworthiness of an individual or entity.
Growth in the United States was the positive surprise in the second half, even as Euro area, Japan and China grew at or above consensus, Barclays Africa said.
This more than made up for slow economic expansion in larger markets that account for about 80 percent of the group’s income, including South Africa.
Barclays Africa, along with rivals, has struggled to increase lending as slowing economic growth in many African markets tempers demand from corporate clients and rising interest rates at home hit consumption by retail customers.
But the election earlier this month of Cyril Ramaphosa as president, pledging to revitalise the economy, has boosted confidence.
Barclays Africa said it expected growth in loans and deposits to improve in 2018 and forecast stronger loan growth at constant currency from the rest of Africa. It also expected stronger loan growth in corporate and investment banking than in retail banking in South Africa.
The group also forecast modest improvement in gross domestic product for South Africa to 1.4 percent in 2018.