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Barclays Zim sees benefits in cutting off global nexus

01 Jun, 2018 - 16:06 0 Views
Barclays Zim sees benefits  in cutting off global nexus

eBusiness Weekly

Tawanda Musarurwa
When Barclays Plc first announced plans to divest from Zimbabwe, no one would have dreamt that the Zimbabwean operation — Barclays Bank Zimbabwe — would end up in the hands of Malawi’s FMB Group.

For one thing, Barclays Bank Zimbabwe was bigger than FMB.

At the time of the acquisition last year, FMB had a market cap of $51,4 million, while Barclays Zimbabwe is at $78,6 million.

Additionally, the balance sheet of Barclays Zimbabwe at the time, at $476, 2 million was pointedly superior to that of FMB at $450,8 million.

FMB clearly had a strategy in mind in going for its bigger counterpart, but it also meant that Barclays Zimbabwe was shedding off its international nexus and going regional.

Barclays Plc is a British multinational investment bank that has operations in over 40 countries and employs approximately 120 000 people, while the FMB Capital Group is a medium-sized financial services provider in Southern Africa, and has banking operations in Malawi, Botswana, Zambia, Mozambique and now Zimbabwe.

Strategic benefits

Barclays Zimbabwe managing director Samuel Matsekete, thinks the move can have strategic benefits.

“Barclays Bank Plc is a global bank and operate across broader markets and FMB Capital is a regional bank. If you look at the two you cannot say that they are the same, but if you look at the two in terms of advantages and disadvantages the global one has advantages but it has its own disadvantages. The regional one has advantages that it presents.

“So one of the advantages of being regional and being closer to the market is that we should become more responsive, we know the markets better and therefore we can respond to the markets much quicker with solutions that are best suited and adapted to the requirements of the customer,” said the MD.

“Sometimes that’s not as easy when you look at the other types. But the second (advantage) is that when you look at a region, you also can optimize relationships in the ecosystem of customers within the region and that ecosystem tends to be intricately known if you are playing in that location. We are quite alive to the fact that the change positions us differently from where we were, but we believe that there are advantages.”

But what do the numbers say?

A solid financial performance

Having completed the acquisition of Barclays Zimbabwe last October, perhaps a fair indicator of the impact of FMB’s impact can be the performance of the local operation during the first four months of 2018.

According to numbers given by the MD in a trading update to shareholders this week, Barclays Zimbabwe registered a profit of $26,2 million for the four-months to April 2018, up 16 percent prior comparable period.

In terms of the other key numbers for the period under review, the MD told shareholders:

“The revenue line is in line with our internal plans, but when we come to profit before tax we are ahead of our internal plans for those four months.

“The composition of our income is reflecting increase in net interest income by weight from 30 percent to 45 percent this time around.

“Operating costs year-on-year rose by 7 percent, which was lower than the year-on-year increase we experienced same time last year,” he said.

“Cost to income ratio is showing an improvement trend compared to same period last year. We are now looking at 58 percent down from 63 percent when we compare those two periods.

“We believe we still have a strong loan book. A loan loss ratio of 0,3 percent which we believe is still way better than the average we have seen in the market

He added: “The performance that we shared in the trading update to an extent reflects how we are trying to tap into these new advantages. Another simple indicator is that when you are global you define your risk appetite by what you see at the global level, but that can potentially dislocate you if you are in a certain local environment and you have got certain nuances in that market, which are not necessarily represented by a global perspective,” said Matsekete.

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