Good Morning, Barclays Bank of Kenya announced third quarter results this morning. Below are our views on the results:
|-||Sep 2014KES B||Sep 2015KES B||% Change|
|Total Interest Income||17.02||18.54||8.94|
|Total Interest Expense||2.23||3.34||45.22|
|Net Interest Income||14.72||15.20||3.27|
|Total Operating Income||21.21||21.72||2.36|
|Total Operating Expenses||12.13||12.60||3.92|
|Loans and Advances||12.32||13.62||10.55|
|Funded Income % of Operating Income||69.37%||69.99%||-|
|Non-Funded Income % of Operating Income||30.63%||30.01%||-|
|CTI less Provisions||51.70%||53.49%||-|
- Increased Profit: PAT rose by 2.7% y/y from KES6.24B in September 2014 to KES6.40B in September 2015 driven by a 3.3% growth in net-interest income. NII also slightly increased by 0.31% to KES6.52B from KES6.50B the previous year.
- High Expenses: The bank’s expenses increased with total interest expense up 45.22% to KES3.34B from KES2.23B. Total operating expenses were up 3.92% to KES12.60B from KES12.13B.
- Deposit Growth: Customer deposits increased an impressive 46% to KES2.88B from KES1.97B. Our investment case for Barclays is informed by a recovering loan book and deposit growth estimated at (3-yr CAGR of 6.02% to FY17e) driven by diversification into new business lines and strategic focus shift to SME’s.
- Rating: Our rating on Barclays is Accumulate with a target price of KES17.79. The stock’s current price is KES13.95.