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Daily Nation : February 7th 2014
34 | BUSINESS RESULTS | Projections for the coming trading period Barclays sees growth in 2014 after 13 per cent profit decline last year Institution blames high costs and sharp rise in bad debts during last year for reduced performance BY JOSHUA MASINDE @masindej email@example.com year. A sharp rise in bad debt and one- B off restructuring costs saw the bank’s after tax profit decline 12.6 per cent to Sh7.6 billion in 2013 from Sh8.7 billion reported the previous year. The bank, however, grew its net interest income by four per cent to Sh18.9 billion against Sh18.1 billion in 2012. Bad debts increased by 747 per cent to Sh1.2 billion from Sh144 million in 2012 while lay offs hit the bottom line by Sh788 million. “For the industry, we have a situation where the growth of non-performing loans is twice the level of overall loan growth… This becomes a key area of focus for us to ensure we continue our prudent risk management guidelines,” Barclays Bank chief executive, Mr Jeremy Awori, said. Central Bank of Kenya had in its Credit Survey for 2013 warned that banks were facing a higher risk of non-performing loans in 2013 as the cost of living and interest rates in the period took a toll on households, undermining their capacity to service loans. This was compounded by the government’s delay in settling fees owed to contractors for completed projects greatly affecting repayment patterns of customers in the building and construction sector. “Credit risk is the single largest factor affecting the soundness of financial institutions and the financial SALATON NJAU | NATION Barclays Bank of Kenya chief finance officer Yusuf Omari (left), managing director Jeremy Awori (centre) and chairman Francis Okello during the bank’s announcement of 2013 full year results at Intercontinental Hotel in Nairobi yesterday. Typically, in the past, we have lagged the industry average on income growth. Now we are actually growing at a slightly faster pace than the industry growth” Mr Awori system as a whole, and lending is the principal business for most banks,” the CBK said. Barclays Bank’s operating costs also rose by 9 per cent to Sh15.6 billion from Sh14.3 billion in the period following increased investment in technology to enhance its core banking system and in mobile and Internet banking services. Loans and advances to customers increased by 14 per cent to Sh118 billion from Sh104 billion. “The sharp rise in impairment charge is attributed to non-recurring impairment of Sh1 billion, recorded as at the end of 2012. Excluding the one- off recoveries, the impairment charge would be in line with the balance sheet growth,” said Mr Awori. The chief executive noted that the fruits of consolidation and investment in 2013 are set to be seen in 2014 in terms of increased earnings. “Typically, in the past, we have lagged the industry average on income growth. Now we are actually growing at a slightly faster pace than the industry growth. Secondly, we want to grow our balance sheet at a faster pace than in the past by keeping tabs on strong risk management principles,” said Mr Awori. arclays Bank says it sees growth in 2014 after high costs hit its profitability in the last financial DAILY NATION Friday February 7, 2014 PERFORMANCE Low user growth numbers see Twitter take a beating. P. 38 Food firm re-enters the Kenyan market BY NATION CORRESPONDENT Global ingredients manufacturer Ingredion has re-entered the Kenyan market after a merger between Corn Products International and National Starch. The US headquartered firm had given up on the local market after being pushed out by scarcity of main raw material - maize, in July 2012. Operating as Corn Products Kenya, the then Eldoret-based company manufactured animal feeds, starch and dextrose. It shut down leaving 300 people jobless. During its re-launch yesterday, Ingredion senior director strategy and business development EMEA, Mr Mike Croghan, said positive macroeconomic indicators, youthful population, growing middle class and increasing urbanisation make Kenya an attractive investment destination. “With the business model we have adopted, Kenya will act as our product development base as we ship in raw material from our international factories,” said Mr Croghan. “If market conditions allow, we will review our business strategy forward and expand to East and West Africa.” The company operates in more than 40 countries and serves approximately 60 diverse sectors in dairy savoury, food processing, corrugated carbons, brewery and pharmaceuticals. 2012 The year when the company closed its operations in Eldoret citing the lack of its main raw material Solar firm targets a million households BY NATION CORRESPONDENT M-Kopa Solar has raised Sh1.7 billion to expand its existing customer base to a million households by 2018 from the current 50,000 users. Commercial Bank of Africa (CBA) has injected Sh860 million into the project that targets off-grid households with the green energy. Under the M-Kopa Solar model, customers buy a solar home system with an initial deposit followed by daily payments of Sh50 for one year before owning it. According to Mr Jesse Moore, managing director of M-Kopa Solar, users of the products have achieved a combined saving of Sh3.2 billion since October 2012 when the product was launched. “This is a combined savings by existing M-Kopa Solar households estimates based on a four-year average usage of solar system, or Sh64,000 per household,” he said. M-Kopa Solar is a mobile money-based model that makes systems using the sun affordable for low income consumers - most of whom live below the poverty line, and are out of formal banking system. “There is very little formal credit and it is clear that there is an enormous credit market that wants to be empowered to access alternative energy sources conveniently,” said CBA chief executive Geremy Nguze. SALATON NJAU | NATION M-Kopa Solar managing director Jesse Moore (left), Commercial Bank of Africa chief executive Jeremy Ngunze (centre) and Safaricom CEO Bob Collymore during the event.
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