CIB structures innovative solutions to meet clients’ needs by delivering specialist investment bank, corporate bank, financing, risk management and advisory solutions. We deal with a variety of clients across industry sectors such as corporates, financial institutions and public sector bodies. Through combining the global product knowledge with regional expertise and an extensive, well-established local presence, our goal is to build not only a sustainable, trustworthy business, but also a business that helps clients achieve their ambitions in the right way.
This is a summary extract from our segment performance reporting. For the full segmental analysis, see our 2015 financial results booklet.
- Corporate South Africa strategy is on track with revenues up 11% to R3 975m (2014: R3 566m).
- Rest of Africa headline earnings increased 20% and is now 37% of CIB headline earnings.
- Private Equity portfolio reduced 17% to R2.4bn (2014: R2.9bn) in line with our strategy.
- Long-term client advances grew 27%.
- Growth in Prime Services customer numbers and improved Equity research contributed to a 21% increase in Equities and Prime revenues to R696m (2014: R573m).
- South African Fixed Income, Currency and Commodities business was down 21% to R1 922m (2014: R2 447m) due to reduced client flows, compressed margins and a challenging trading environment.
- Impairments increased by more than 100% to R793m (2014: R248m) with increased charges in both South Africa and Rest of Africa.
- Costs increased 9%, reflecting greater investments in systems and the effect of a weaker rand on the translation of Rest of Africa costs.
We faced a challenging macro environment as South Africa experienced its worst drought in a century, electricity supply continued to be constrained, commodity prices decreased, interest rates increased and business and consumer confidence weakened, contributing to weak private sector investment growth. A difficult jobs market, combined with rising interest rates and tough credit conditions, led to low consumer demand and impacted investment plans.
Growth in our presence markets outside South Africa moderated further due to lower commodity prices and an adverse external environment. Fiscal and current account balances remain fragile in a number of countries, which, together with the broader domestic and global environment, resulted in a number of currencies weakening significantly.
Monetary policy rates were raised in Ghana, Kenya, Mozambique, Uganda and Zambia, in response to currency pressures and upward inflation, and cut in Botswana and Mauritius in response to growth concerns.
We made progress on our strategy of growing the Corporate Bank, with Rest of Africa’s contribution to revenue increasing, and we made significant advances by upgrading our IT environment through major systems implementations. The Rest of Africa continued to benefit from investment in systems, risk process and talent. BARX (our electronic foreign exchange trading platform) is now operational in 10 countries and will assist in maintaining this level of growth into the future. We expect to benefit from increased client flow as Barclays.Net is introduced across the continent over the next two years.
Our strategy to grow Corporate Bank in South Africa is gaining momentum as we experienced double-digit revenue increases for the third successive year. Barclays.Net, our primary online banking cash management platform, is now implemented in South Africa and client migrations to the platform are progressing.
Our focus will remain on further embedding client-centricity by:
- leveraging the refreshed client coverage structure to drive client commitment and facilitate simpler, more efficient transactions;
- providing innovative, cost-effective, transparent and efficient digital solutions and developing an E-Bank that will enable clients to grow and manage their businesses in a cost-effective, transparent and efficient manner;
- improving analytic capability to enable better decision-making internally and for clients; and
- responding to the challenging economic environment by applying responsible credit criteria and disciplined cost management.