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UPDATE 2-Barclays Kenya profit up 13 pct, sees tough 2009
February 17, 2009 / 6:19 AM / 9 years ago

UPDATE 2-Barclays Kenya profit up 13 pct, sees tough 2009

(Adds detail, analyst, share price)

By Duncan Miriri

NAIROBI, Feb 17 (Reuters) - Barclays Bank of Kenya BBK1.NR posted slightly better than expected results for 2008 and raised its dividend, but predicted this year would be tough due to a drought at home and global economic slowdown.

Ranked No. 1 by assets in east Africa’s biggest economy, the bank’s pretax profit rose 13 percent to 8.016 billion Kenyan shillings ($101 million), despite cautious growth in the loan book and an 87 percent leap in provisions for bad debt.

Investors cheered the results, sending the bank’s shares up as much as 4.8 percent to 43.5 shillings on Tuesday. The shares eased back 42.0 shillings at 1100 GMT.

“The market is thin and the 5 percent dividend and, frankly, probably better than expected results has pushed the share up,” said Aly Khan Satchu, an independent trader and analyst, adding expectations were generally at rock bottom.

The bank, majority owned by British bank Barclays (BARC.L), raised its 2008 dividend 21 percent to 2.0 shillings.

Like other Kenyan businesses, Barclays faced a challenging start to 2008 when a bloody crisis erupted in January following a disputed election, bringing the economy to a near standstill.

“These numbers are fully cognisant of the very difficult operating environment. In light of the costs ... the profit was more or less in line,” said Kenneth Kaniu, an investment manager at Stanbic Investments.

Managing director Adan Mohamed said 2009 was likely to be tougher due to the global economic slowdown that has coincided with a severe drought in Kenya.

The government has said about 10 million people are in need of food aid and has appealed for international help, calling the crisis a national emergency.


Costs rose nearly 30 percent to 14 billion shillings, mainly due to the bank’s expansion programme. The surge in costs was also in step with a high inflationary environment, Mohamed said.

Healthy diversification of revenue streams was already evident with income being generated from both retail and commercial clients, he said. Customers more than doubled to 900,000 in 2008 compared with the previous period.

“Now that we have reached cruising levels we start focusing on productivity and efficiency,” he said.

In 2008, Barclays launched the second tranche of a 5 billion shilling corporate bond to participate in long-term project financing. Mohamed said the bank may return to the bond market.

“Our plan is to do that but at the right time and at the right price. We are not desperate,” he said. (Editing by David Clarke and Dan Lalor) ($1 = 79.75 Kenyan shillings)

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