Barclays Bank records 12.5% y/y decline in PAT in 1H13 results
Barclays Bank has announced 1H13 results posting a 12.5%y/y decline in PAT to KES 3.7bn on the back of a one-off restructuring cost of KES 788.0m. Net interest income grew 3.0% y/y to KES 9.2bn while non-interest income was down 5.0% y/y to KES 4.5bn. The loan book expanded 6.6% y/y to KES 107.1bn. There was an improvement in cost efficiency, with the CTI ratio improving to 50.1% from 50.6% in 1H12 and the CTI was notably below the bank’s target of 50.0%. The bank declared an interim dividend of KES 0.2 per share down from KES 0.3 per share in 1H12, owing to increased restructuring costs and capital preservation as it prepared to conform to the new Prudential Guidelines.

Courtesy of Kestrel Capital.

@mwanahisa, do kestrel do daily reports. Apparently i've not received that one and have only been getting weekly report

It seems this new Kenyan bank CEOs have a penchant for cleaning the books on assuming control. Must be the old 'predecessor was hiding some things' motif coupled with 'this is a new beginning' mind-set

Meanwhile, the honchos at Standard Bank (SA) with their colleagues at CFC Stanbic are sticking to their guns on the bull case for BBK....

A fair set of Q2:13 results given the context: Our first read of Barclays Bank Kenya’s Q2 results was not simple with headline net income down 10% y/y but up 25% q/q on one-off restructuring charges; and the stock’s initial c2% fall probably reflected this as it traded. Adjusting for this, underlying net income was marginally down 4% y/y and 5% q/q which in a low visibility Q2 operating environment would seem fair to us. In a sense, we see support for the stock’s defensiveness in these numbers.

Still solid by new capital requirements : The c700bps headline fall in CAR to c15% is due to cKsh60bn additional RWA on our calculations to reflect operational risk. While we believe the bank’s relative capital strength is well known and accepted by the market, we suspect that in reality, the new capital requirement with a minimum 10.5% core capital to total RWA buys most larger banks some interim breathing space.

Option on asset growth drip-feeding : It’s the tone rather than the numbers that makes a difference in Barclays Q2 disclosure as we see it. We see some support to stronger and selective asset growth in the bank’s highlight of its alignment with asset-driven South African parent, and its participation in the USD5bn facility to Kenya’s largest energy generator is a case in point.

Headline EPS cut hides underlying strength : Our forecast review is mostly a rebalancing exercise, which consists in a strong cut in NOI partly compensated by better run-rate guided NII and flat operating expenses. The one-off restructuring charge alone, which we estimate at Ksh850m for the year, reduces our FY13E EPS by 6%. Our new FY13E net income forecast is cKsh9.3 EPS or an EPS Ksh1.71 from Ksh1.98. We also cut dividend pay-out trimmed by 3pts to 55% to reflect management’s more upbeat stance on asset growth.

Reiterate BUY, TP Ksh21 : The bears of the stock may pick on headline moving parts, especially when going through the numbers. Headline relative valuation may also not help, and we would be the first to admit that Barclays is not cheap at FY13E P/E of 10.1x and P/B of 2.8x. We argue that this is justified by the solid and defensive profile, reiterate BUY.


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