Costs related to the separation of South African lender Absa from British-based Barclays have weighed down on the South African bank as it announced its half year results.
The separation is estimated to have cost Absa around Ksh10.5 billion, according to Reuters.
Absa reported a 4% increase in operating costs while cost-to-income ratio dipped to 56.2% from 55.5% during the same period last year. The lender raised revenue by 3% during the six months.
Personnel decrease stood at 1% and is largely due to reductions across Africa outside the bank’s South African home base. Marketing costs saw a 6% rise.
Barclays sold down its controlling share in Absa to 14.9% as it is expected to focus on the UK and the US market. In 2005, Barclays had a 50.1% stake in Absa that had reached 62% last year.
The separation has seen a rebranding of the Barclays Africa Group to Absa Group across the African market. Absa’s initial acronym was Amalgamated Banks of South Africa and was formed in 1991 after a merger of South African lenders.
Absa chief executive officer Marcia Ramos was however upbeat about the prospects of the separation going forward. She said UK regulators no longer viewed Barclays and Absa as one entity which was advantageous. ““In practical terms, it means that we no longer operate under any policy frameworks set by Barclays PLC. For example, we are now free to set our own risk appetite.”
The bank operates in at least 10 countries in Africa, including Kenya where it launched Timiza – an app-based personal loans platform – in March this year.