Barclays non-interest income declines

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BARCLAYS Bank Zimbabwe (Barclays) has missed out on low hanging fruits after it registered a decline in non-interest income in the first half of this year.
Non-interest income, which is revenue that a bank gets from activities other than lending, has emerged as a major source of income for local banks after takings from electronic transaction commissions have been on the rise in the face of serious cash shortages.
The bank’s financial statements show that its non-interest income declined by 14 percent, from $25,1 million recorded for the six months to June, 2017, to $21,7 million in the period under review.
Fees and commission income was down 11 percent, from $15,5 million recorded in the half year to June 30, 2017, to $13,8 million after account activity fees and card-based transaction fees both declined by 27 percent respectively.
The drop in the bank’s non-funded income was made worse by a decline in cash withdrawal fees and foreign exchange income which decreased by 54 percent and 29 percent, in that order.
A 90 percent increase in interest income however more than made up for the decrease in non-funded income, with the bank ultimately registering a 43 percent increase in profit after tax for the half year, at $13,6 million from $9,5 million in the previous comparable period, after it racked in $19 million in interest income.
The increase in interest income was buoyed by a 28 percent increase in the bank’s loan book, which grew from $112 million to $143 million over the half year.
The bank’s asset base increased by six percent to $590 million, as it acquired $148 million in Treasury Bills in what has been the most noticeable change since the bank changed hands in October 2017. Before the deal, the bank had maintained marginal holdings of the government paper.
The deal, which saw Malawi Stock Exchange-listed FMB Capital Holdings (FMB) acquiring a 42 percent stake in the bank from Barclays Bank PLC (BBP), kicked off a transition which the parties said would see the bank switching from Barclays to FMB branding over a period of three years.
At the time of the deal, both FMB and BBP said it was ‘business as usual’ with no immediate changes anticipated.
“The bank is clear about the significant opportunities presented by the transition it is going through. Whilst continuing to build on the strong heritage and reputation built over the 106 years the bank has operated in the Zimbabwean market, the current transition is a unique opportunity to reconfigure the business to be more responsive to customer needs that are unique to the local environment,” Samuel Matsekete, Barclays’ managing director said in a statement accompanying the bank’s financial statements for the six months ended June, 2018.