We effectively manage risk, and create sustainable returns
Material focus areas
Key matters raised by stakeholders
- Barclays PLC’s sell-down, the resulting separation and potential revenue loss, system changes and management capacity
- Resilience and revenue growth in an uncertain/volatile economic environment and sustainable cost containment
- Strong and emerging competition particularly fintech in the retail space
- Operational risks including IT, cybercrime and physical security
Measuring our progress
Sustainably growing revenue
Our revenue trajectory continues improving in several target areas, including Rest of Africa Banking, Markets, Corporate South Africa and Retail Banking South Africa. Our revenue share from outside South Africa increased to 22.5% (2015: 20.8%). The weak macro backdrop and regulatory pressures in South Africa, coupled with limited growth in primary customer numbers curbed positive revenue momentum in RBB, which remains a priority in 2017.
We are top three by revenue in three of our largest markets – Botswana, Ghana, and South Africa, however, behind our target which includes Kenya and Zambia.
Effectively managing risks
Our credit loss ratio increased to 1.08% (2015: 0.92%) due to macroeconomic pressures experienced by consumers and a significant impairment by a large corporate client. Our portfolio provision to performing loans and advances grew to 0.79% (2015: 0.65%), while coverage on non-performing loans rose to 44.20% (2015: 43.17%).
Disciplined cost management while enabling strategic investments
Our structural cost programme continues producing efficiency gains, while allowing us to invest in strategic initiatives, including technology, which increased to 19% of our total costs (2015: 18%).
Our cost base management caused operating expenses to grow below inflation in constant currency. This, combined with our revenue growth in several targeted areas outlined above, improved our cost-to-income ratio to 55.2% (2015: 56.0%).
Delivering appropriate shareholder returns
Our return on equity decreased slightly to 16.6% (2015: 17.0%). This is satisfactory, taking into account the operating environment and substantial single-name credit impairment charge. Excluding the latter, our return on equity would have increased year-on-year. While separating from Barclays PLC will impact our near-term returns, we still believe that our stated longer-term target remains appropriate for our Group.