2008 Full Year Results

Barclays Bank of Botswana announces 2008 results

25 March 2009

Barclays Bank of Botswana (“Barclays Botswana”) today announced its results for the full year ended 31 December 2008. Total income increased by 40% to P1,156m; earnings per share increased to 50t per share; whilst profit before tax grew by 84% to P543m.

Highlights of the financial results for Barclays Botswana:>
- Income up 40% to P1,156m (2007: P823m)
- Profit before tax grew 84% to P543m (2007: P295m)
- Earnings per share increased 79% to 50t (2007: 28t)
- Proposed dividend held at 11.7t per share to support continued growth and strengthen capital position.

Reported profit before tax included a one-off gain relating to the Visa Initial Public Offering (IPO) of P32m. Excluding this gain and adjusting for a single significant corporate impairment in 2007 of P72m, underlying profit before tax grew by 39% to P511m.

The results reflect the benefits of investment in people, expansion of the distribution network, and development and enhancement of products and services.
New channels were introduced, extending Barclays Botswana’s reach into under-banked areas to the benefit of existing and new customers.

Performance

Net interest income increased by 42% to P 788m (2007: P555m). Growth was driven by higher volumes in customer loans – a result of the retail expansion programme launched in 2007. Total customer loans increased by 33% to P5.2bn (2007: P3.9bn). The increasing margin was driven by the change in the mix of assets from balances with the Central Bank to retail consumers.

Net fee and commission income increased by 35% to P212m (2007: P157m). This reflects increased client activity in current accounts and continued growth in personal lending.

Total income during the period increased by 40%, including a one-off gain of P32m from the sale of Barclays Botswana’s shares in Visa Inc, following its IPO.

Impairment charges reduced from P95m to P61m. The impairment charge for 2007 included a single significant corporate impairment of P72m. On an underlying basis, impairments increased, reflecting growth in customer loans and penetration into the mass market segment. Delinquency rates continue to be monitored closely to ensure pricing matches risk.

Operating expense growth of 27% reflects the significant investment made in the retail expansion programme begun during 2007. Through a deliberate effort to manage costs in all expense lines, as well as general efficiency improvements, Barclays Botswana has seen its cost to income ratio fall from 53% to 48%, excluding the one-off gain on the sale of its Visa shares. A number of initiatives are being implemented to manage the cost to income ratio.


Capital Management

At 31 December 2008, the Tier 1 capital ratio, before dividends, was 17.6% (2007: 16.6%). The equity Tier 1 ratio was 12.3% (2007: 13.8%). The decline in the equity Tier 1 ratio is mainly attributable to the increased investment in the business, which initially consumed additional capital.

Barclays Botswana has recommended a final dividend payable to shareholders of 11.7t per share. Keeping the dividend unchanged will enable Barclays Botswana to continue investing in the business to promote continued growth. We maintain our progressive approach to dividends, expecting dividend growth broadly to match earnings growth over time.

Thuli Johnson, Barclays Botswana Managing Director, said:

“Barclays Botswana has delivered outstanding results in 2008, with profits 84% ahead of 2007 performance, despite the impact of the global financial crisis. Our focus on rapid – but controlled – growth, at the same time giving attention to governance, risk and control, has seen Barclays Botswana perform very strongly. Whilst we are cognisant of the effects of the economic slowdown, we are confident that, with the same focus on customer-centricity and internal controls, we are well-positioned to deliver in the years ahead.”

Outlook

Barclays Botswana has begun 2009 positively with the acquisition of the domestic Barclaycard business from Barclays Bank PLC completed on 1 January 2009. This strategic investment will allow management to drive the business forward, to the benefit of both our customers and our shareholders.

Barclays Botswana expects its customers to remain under pressure in 2009 as the global financial crisis begins to have an impact on the Botswana economy. As such, higher impairments within the retail portfolio are expected.

Nonetheless, the Board of Barclays Botswana remain confident that the investment made in the business will continue to deliver significant value for shareholders.

For more information please contact

Botswana Press Contact:
Esther Norris
Tel: +267 395 7312
Mobile: +267 71526383
esther.norris@barclays.com

UK Press Contact:
Phillippa-Jane Vermoter
+44 20 7116 7226
phillippa-jane.vermoter@barclays.com

About Barclays Bank Botswana:

Barclays Bank Botswana is part of the Global Barclays Group and listed on the Botswana Stock Exchange. It is the largest bank in Botswana offering Retail banking, Commercial banking and credit cards with a market capitalisation of over 5 billion

Employing over 1300 permanent staff, Barclays Bank Botswana services customers across the country through a network of 100 ATMs and 54 outlets.


To find out more about Barclays Bank of Botswana / the Barclays Group and its products and services, please visit our website: www.barclays.com or visit any of our branches and speak to one of our consultants.

About Barclays Global Retail and Commercial Banking:

Barclays Global Retail and Commercial Banking (GRCB) encompasses all of Barclays retail and commercial banking businesses around the world. Operating in more than 50 countries and employing more than 118,000 people, Barclays GRCB comprises UK Retail Banking, Barclays Commercial Bank, Barclaycard, GRCB Western Europe, GRCB Emerging Markets and Absa (Barclays Bank PLC owns 58.8% of Absa Group Limited). Barclays GRCB serves millions of customers and clients around the globe through a network of more than 4,700 distribution points and more than 13,100 ATMs.

To find out more about the individual Barclays GRCB businesses, please visit our website: www.barclays.com.

About Barclays :

Barclays is a major global financial services provider engaged in retail and commercial banking, credit cards, investment banking, wealth management and investment management services, with an extensive international presence in Europe, the USA, Africa and Asia.

With over 300 years of history and expertise in banking, Barclays operates in over 50 countries and employs over 155,000 people.

Barclays moves, lends, invests and protects money for over 48 million customers and clients worldwide.

For further information about Barclays, please visit our website www.barclays.com.