Barclays pins hope on corporate banking
Isaac Pinielo | Tuesday September 20, 2016 16:52
These segments, which include corporate and investment banking, and the retail and business banking, registered significant growth in the first half of 2016.
Last week managing director, Reinette van der Merwe said the bank’s profit before tax growth from P111 million in the half year ended June, 30 2015 to P270 million this year was mainly driven by sustained revenue growth in the retail and banking business, and significant growth in excess of 50%, by corporate and investment banking.
She also noted that despite the various challenges faced over the trading period, the business continued to register strong growth in its financial position resulting in an overall year-on-year balance sheet growth of 12%. Loans and advances to customers increased by P1.5 billion representing an 18% year-on-year growth.
“This growth was largely driven by corporate and investment banking and business banking segments that grew by 116% and 79% respectively. This was mainly in our chosen business segments, where we offered various debt and transactional solution products,” she said.
In addition, van der Merwe said deposits due to customers increased by 10% as a result of positive flows from various institutional depositors as the liquidity squeeze eased up in the second half of 2015. She said this was achieved across all business segments and further demonstrates the progress “we are making towards the achievement of our strategy.”
“Our regulatory capital position is at P1.9 billion, representing a ratio of 19.2% against the regulatory limit of 15%. The Bank remains well capitalised to support future balance sheet growth and will continue to review its capital position in line with capital demand and regulatory changes,” she said.
According to van der Merwe, the corporate and investment banking segment delivered a phenomenal performance with total year-on-year income growth of 57%.
“This was driven by our strategy with very precise focus on client needs. We saw significant growth in our assets as corporate entities strive to diversify their business models,” she said. She added that this propelled asset growth from P1.8 billion to P3.2 billion, with key focus on the chosen strategic sectors. Corporate liabilities grew by 16% while the markets business delivered income growth of 62% in an environment characterised by intense competition and volatility in currency markets.
The MD said this was achieved through synergies between the corporate and markets teams. “We saw an improvement in the quality of our loan book and we continue to monitor covenants closely as we see a general deterioration in credit quality across the banking industry,” she said.
On the retail and business banking segment, van der Merwe said the bank’s strategy was centred on enhancing the customer service experience, while deepening relations with the existing client base, and growing market share in the chosen sectors and segments.
She noted that this strategy called for a number of initiatives to be rolled out, adding that as they continue on this front, they saw positive momentum in the growth of products which have positively impacted the revenue lines. According to van der Merwe, profitability for the first half was underpinned by income growth of 18% and a reduction in impairment of 14% year-on-year. She said growth in income has been driven by a combination of a lower Interest expense and an increase in fee income through increased transactional volumes.