Key points:

• Dividend increased 4% to 1 070 cents per share
• Income increased 1% to R72.9 billion
• Headline earnings increased 4% to R15.6 billion
• Impairments declined 20% from a high base in 2016
• Cost-to-income ratio rose to 56.8% from 55.2%
• Return on equity decreased to 16.4% from 16.6%
• Balance sheet at R1.2 trillion, with strong capital and liquidity levels

Barclays Africa Group, one of the largest banking groups in Africa, today released its first annual financial results since the successful conclusion of the reduction by Barclays PLC of its majority shareholding in Barclays Africa Group last year.

The Group reported a 4% increase in headline earnings in 2017 as impairments declined substantially from a high base in 2016. Return on equity of 16.4% remains strong.

Headline earnings, a measure analysts use to gauge profitability, grew despite the continued slow economic expansion in some of the Group’s largest markets, including South Africa, where the Group generates approximately 80% of its income.

Barclays Africa Group continues to have solid balance sheet assets of R1.2 trillion and strong capital and liquidity levels – these are measures of the strength of buffers banks have in place to protect customer deposits.

Barclays Africa Group’s separation from Barclays PLC is progressing well and the parties continue to work together to ensure a seamless separation.

*Note: Normalised numbers are presented below to adjust for the consequences of the separation and better reflect the Group’s underlying performance.

• Clear ambition to double market share to 12% of African banking revenues
• Restore market-leading position in core business areas
• Sustainable growth to be driven by a transformative culture
• Barclays Africa Group Limited to be re-named Absa Group Limited

Barclays Africa Group Limited, one of the largest banking groups in Africa, today outlined a new business strategy to deliver on ambitious goals following the successful sell-down by Barclays PLC of its majority stake. The Group also announced its new corporate identity.

Barclays Africa Group CEO Maria Ramos said, “Our overriding goal is to become a banking group of which Africa can be proud, a forward-looking African business that recognises our African heritage, rooted in Africa, with global reach. We have a clear and undiluted ambition to double our market share of African banking revenues to 12%.” It is a bold plan for growth.

“Growth has to be an essential part of our DNA, the driver behind our every action and a core facet of our ambition for this business. Sustainable growth is fundamentally about culture. We are building our culture around a shared sense of purpose and identity, a celebration of our diversity and inclusion, a passion for growth- helping our colleagues bring their possibility to life.

A priority for Barclays Africa is to restore leading positions in core business areas, while expanding into new markets, enabling the group to deliver double-digit growth.

The Group will expand its corporate and investment banking unit to certain international jurisdictions, with offices set to open in London and later in New York, trading as Absa Securities, and offering opportunities for our clients to financial markets offshore, and providing access to corporates and institutions seeking to invest in Africa

As an independent and stand-alone business, Barclays Africa will have the agility, the means and the risk appetite to strive for growth, said Ramos.

“This is an exciting time for us. The sell-down has provided us with the headroom to reinvigorate our company while building on the proud heritage Barclays has in Africa. We will work hard to deliver on our new strategy and to build our reputation as a bold, trusted, innovative and customer-focused brand.

Barclays Africa group is building a scalable, digitally led business, passionate about innovation, Ramos said.

Re-branding

Barclays Africa Group Limited will be renamed Absa Group Limited in due course and trade as Absa across its operations (currently branded Barclays) in Africa, pending shareholder and regulatory approvals.

“The sell-down gave us the opportunity to roll out a brand that reflects our identity in Africa and to unite our operations in 10 countries behind one name,” Ramos said. “We will be Absa, not as you know it, but relaunched, re-presented and with an identity fit for the new and forward-looking business we are creating.”

Absa is currently the brand of the Barclays Africa Group’s South African business. The Absa brand has substantial equity as one of the largest banks in South Africa and enjoys recognition in many of the countries in which Barclays Africa operates under the Barclays brand currently.

Barclays Africa Group undertook extensive research internally and externally, in a process that included more than 130,000 conversations with employees and stakeholders about the brand and strategy of the Group.

“We are re-setting our business with a bold, new growth strategy that leverages our existing footprint and market insights,” Ramos said. “The new identity is further evidence of the scale of the transformation and change in our business – a new brand for a new banking group,” Ramos said.

Botswana, Kenya and Nigeria have moved up the Absa Africa Financial Markets Index, produced by the Official Monetary and Financial Institutions Forum, and South Africa remains in top position, supported by strong financial market infrastructure and a robust legal framework. However, South Africa’s macroeconomic performance has deteriorated over the past year.

Notably, the country no longer tops the index across all six pillars as it did in 2017, having been overtaken by Kenya on ‘access to foreign exchange’ and by Nigeria in ‘market transparency, tax and regulatory environment’. Nigeria is a new entrant to the top five, as a result of Namibia falling to sixth place from fourth this year.

The five highest ranked financial markets in the 2018 index are: South Africa, which remains in the top position; Botswana, which rose to second place from third last year; Kenya, which climbed two spots on improved access to foreign exchange; Mauritius, which moved down to the fourth place from second last year; and Nigeria, owing to improvements in administrative efficiency and tax incentives that have boosted the country’s regulatory environment.

Now in its second year, the index is a premier indicator of the attractiveness of Africa’s financial markets, for use by governments, investors and asset managers around the world. ‘The second edition of the Absa Africa Financial Markets Index draws attention to the considerable investment opportunities and untapped market potential of countries across the continent,’ says Akinwumi Adesina, president of the African Development Bank, in a foreword to the report.

‘The development of well regulated, deep and liquid financial markets is a key priority that should be at the top of Africa’s development agenda. The index facilitates a meaningful debate about the maturity and accessibility of Africa’s financial markets. It is an important contribution that supports policy-makers, investors, regulators and other market participants to identify the areas and initiatives which will drive the most significant improvements,’ says Maria Ramos, chief executive officer of Absa Group.

‘It is heartening to see the advances made by African countries, in many areas, to improve the efficiency of capital markets,’ says David Marsh, chairman of OMFIF. ‘However, more remains to be done regarding the robustness of market infrastructure and regulatory frameworks across Africa and we look forward to tracking progress annually.’

This year’s edition extends coverage to three additional countries – Angola, Cameroon and Senegal – and pays special attention to policies for enhancing market growth, including financial inclusion and investor education. Countries are progressing with policies that support the development of financial markets across the continent. South Africa’s ‘twin peaks’ strategy for improving financial regulation and Mozambique’s ‘financial sector development strategy’ stand out among the frameworks introduced over the past year. Such initiatives have boosted performance for the index as a whole.

The greatest area for improvement across the continent remains the ‘capacity of local investors’. Excluding the top five economies, the remaining countries average a score of just 22 out of 100 in this pillar. Survey respondents highlighted that the lack of knowledge and expertise of pension fund trustees and other asset owners hinders the development of new financial products, by reducing their demand for more sophisticated assets and strategies to diversify returns. The index also shows that improvements in market infrastructure and regulatory frameworks could boost the performance of countries in the middle of the index over coming years.

The 20 economies surveyed are: Angola, Botswana, Cameroon, Egypt, Ethiopia, Ghana, Ivory Coast, Kenya, Mauritius, Morocco, Mozambique, Namibia, Nigeria, Rwanda, Senegal, Seychelles, South Africa, Tanzania, Uganda and Zambia. The index provides a toolkit for countries wishing to build financial infrastructure by tracking progress annually across six pillars: market depth; access to foreign exchange; tax and regulatory environment and market transparency; capacity of local investors; macroeconomic opportunity; and enforceability of financial contracts, collateral positions and insolvency frameworks.

The Index can be viewed here: https://thinktank.omfif.org/afmi2018

On 11 July this year, Absa Group became the first large corporate to embrace the .Africa domain by changing its website address to www.absa.africa. Launched just more than a year ago, the .Africa domain is widely promoted by the African Union, intended to support and develop business and corporates on the African continent.

Adopting the new – mostly unknown and distinctly African – domain was not without its challenges, but it underscored Absa Group’s efforts to establish its new identity as an independent, digitally led African bank.
Five things Absa learnt in adopting .Africa:

1. As an early adopter, be ready to break big waves.

.Africa is a new domain, launched only last year. When Absa began the process of migrating its online information to its new domain as part of its separation from Barclays, the domain was not even a year old.

With no other large corporate having adopted .Africa as their primary domain, Absa was on its own in working out how to best transfer data, integrate the new domain and enable top-tier cyber protection, while ensuring social acceptance of the new domain. It was no easy feat as the process differs from the steps that would have applied to moving information to another traditional domain name such as .com or .co.za

A complete domain change at Absa involved not only setting up the new domain and all its security protocols, but also migrating almost 60 000 email addresses – seamlessly – while minimising downtime.

The transfer of data and email addresses was by far one of the most complex aspects of the process, and our teams have transferred over 6 000 accounts since 11 July 2018, according to Craig du Toit, Absa’s Brand Technology Lead. As Absa rolls out its new brand and domain across the rest of its African operations, it expects to migrate a further 54 000 email addresses over about 18 months.

2. Global IT infrastructure isn’t designed to embrace .Africa.

Global IT infrastructure is familiar with traditional domains such as .com or .co.uk or .co.za, and much less so with newer domains such as .Africa. Many network servers around the world have bulk lists of ‘whitelisted’ domains that ensure that those on the network have no difficulties in accessing websites with more traditional domains.

According to Registry Africa (ZACR), which allocates .Africa domains, there are only 16 445 registered .Africa domains, compared to the more than 130 million registered as .com sites, in Africa. But, newer domains are not generally on these whitelists, even if they are publicly supported by credible organisations such as the African Union.

3. The traditional domain name space is a bit crowded.

Traditional domains such as .com or co.uk do not have that many more web address options left. The .com addresses and registrations are oversubscribed, with exceedingly high after-market re-purchase prices.

Newer domains such as .Africa are an opportunity for corporates such as Absa to create options for themselves – which is crucial to brand protection.

4. Register, register and keep registering.

Trademark and copyright protection are important to any brand. As a result, many large corporates buy domains and web addresses that they do not intend to use, but that they would not want a competitor or someone with nefarious intentions using.

For example, a large corporate such as Coca-Cola has likely bought up domains such as coca-cola.africa, coca-cola.joburg, coca-cola.durban and many more such addresses, simply to ensure that no one else uses them. Should they ever need these addresses, they are also readily on hand.

Thus far, Absa has registered more than 400 additional domains, as part of a wider defensive strategy.

5. Corporates don’t generally seem to have an email or domain naming policy.

Knowing that the company would have to change its domain from that of Barclays Africa to a name resembling its African identity, Absa looked to other large corporates that have successfully migrated domains for guidance on policies and procedures.

What the team realised, however, is that there was no apparent precedent – let alone policy – to follow. While some large corporates may have moved domains previously, none had moved to a relatively unknown domain like .Africa.

Further, while many companies have an unofficial email address convention (usually along the lines of name.surname@company.domain), they do not appear to have official guidelines on this process. What, for example, happens when two people with the same name join the organisation? Considering that Absa Group employs more than 41 000 employees across the continent, there is a real chance of this happening. The new corporate policy makes provision for these challenges, outlining clear processes.

The Absa team developed an email and domain naming policy from scratch, specifically crafted with our business purpose in mind, and knowledge of how a modern working environment uses domain functionality. Much of the project work involved setting up new environments and moving accounts from outdated platforms that don’t support direct migration.

• Barclays Africa Group to support Frontclear’s Technical Assistance efforts through its Partnership Facility
• Barclays Africa Group has committed to supporting wholesale market development in Kenya, Tanzania, Uganda, Zambia and Ghana over the next 2 years
• Barclays Africa Group and Frontclear signed memorandum of understanding to implement TradeClear in key African interbank markets

Barclays Africa Group Limited (BAGL) has signed a 2-year agreement to provide financial support to the Frontclear Technical Assistance Programme (FTAP) through the latter’s Partnership Facility. The contribution reflects the bank’s commitment to building inclusive, stable and liquid interbank market development through providing training, regulatory support and essential market infrastructure. The programme will be rolled-out in in Kenya, Tanzania, Uganda, Zambia and Ghana.

BAGL and Frontclear also concluded a memorandum of understanding regarding the implementation of the TradeClear interbank guarantee facility in Kenya and other leading African financial markets.

The partnership allows BAGL to implement the findings of the Barclays Africa Financial Markets Index. Released in late 2017, the Index ranks the maturity, openness and accessibility of 17 financial markets in Africa, based on both qualitative and quantitative criteria. Development of local investor capacity and ability to attract foreign capital are also key points of focus.

“Our partnership with Frontclear and this investment in the FTAP Partnership Facility is a further demonstration of Barclays Africa Group’s commitment to expanding and deepening financial markets across Africa. The investment allows us to immediately act on the findings of our Africa Financial Markets Index, which through expert analysis of the African financial markets, draws attention to the considerable investment opportunities and uncovers the untapped market potential” – George Asante, Head of Global Markets Africa (ex SA) at Barclays Africa Group

“We are delighted to formalize our partnership with Barclays Africa Group and look forward to working together in building more liquid, stable and inclusive interbank markets. The developments of these markets are critical to economic growth, stability and poverty alleviation.” – Philip Buyskes, CEO Frontclear

The FTAP Partnership Facility is a unique initiative, in that it teams-up international donors with regional and global banks, in a highly targeted effort to build inclusive interbank markets in frontier economies. Its trainings, advisory and research activities combine to remove the barriers to well-functioning capital markets in Africa, Asia and Latin America.

The TradeClear interbank guarantee facility aims to establish secured trading interbank trading environments in Africa. Under the program, Frontclear guarantees financial losses for all participants incurred due to counterparty failure, thereby stabilizing the interbank market and improving liquidity. It is expected that TradeClear will be implemented in Kenya in Q1 of 2018.

Shareholders are advised of the appointment of Ms Tasneem Abdool-Samad as independent non-executive director to the Board of Barclays Africa Group with effect from 1 February 2018. She will be stepping down from the Absa Bank Limited board (which she joined as an independent director in April 2016) with effect from 31 January 2018.

Tasneem holds a BCom degree and post graduate diploma in Accounting from the University of Natal, and is a qualified CA (SA). She started her career at Deloitte in Kwa-Zulu Natal and then moved to the University of the Witwatersrand, where she was a lecturer in auditing from 2003 to 2006. In 2006, Tasneem returned to Deloitte and subsequently served as a member of the Deloitte South Africa board until 2014.

Tasneem is a non-executive director of Absa Financial Services Limited, Reunert Limited, Long4Life Limited and Crookes Brothers Limited.

Johannesburg
16 January 2018

Enquiries:
Nadine Drutman (Group Company Secretary)
Nadine.Drutman@barclaysafrica.com
Tel: 011 350 4000

Independent lead sponsor to Barclays Africa Group:
J.P. Morgan Equities South Africa Proprietary Limited

Joint sponsor to Barclays Africa Group:
Corporate and Investment Bank, a division of Absa Bank Limited

Absa Group Limited (AGL) announces changes in Executive Committee

Experienced investment banker, Charles Russon appointed Chief Executive of Corporate and Investment Banking
Paul O’ Flaherty steps down from Board, joins the Group Executive Committee as Chief Executive: Engineering Services
Absa Group Limited today announces the appointment of Charles Russon as the new Chief Executive Officer (CEO) of Corporate and Investment Banking, and Paul O’Flaherty as Chief Executive: Engineering Services. Both appointments are effective 5 November 2018.

The appointments are both subject to regulatory approvals.

The appointments are a significant step forward in the Absa Group’s implementation of its new operating model that was announced in April, with four core businesses, each headed by a chief executive. These are Retail and Business Banking (RBB); Corporate and Investment Banking (CIB); Rest of Africa; Wealth, Investment Management and Insurance (WIMI).

Russon has had a long career in corporate and investment banking with global and local exposure. He worked for Merrill Lynch and Deutsche Bank in Europe before joining Absa Capital as CFO in 2006. He later became CIB Chief Operating Officer (COO) before taking up a role as Regional Head of Finance for the Group in 2012.

Russon has been a member of the Absa Group (previously Barclays Africa Group) executive committee since January 2014. He is currently the Chief Executive for Engineering Services, and his responsibilities include overseeing the group’s technology infrastructure, data and security.

The bank has also appointed Paul O’Flaherty as Chief Executive for Engineering Services, and he will join the Group Executive committee. O’Flaherty will step down from the Board, of which he has been a non-executive director since January 2016. As CE of Engineering Services, O’Flaherty will be responsible for Technology, Data, Security, and the Separation program.

O’Flaherty was most recently Chief Executive Officer of Al Naboodah Group Enterprises in the United Arab Emirates. He is also a former Chief Executive Officer of ArcelorMittal South Africa and Finance Director of Eskom.

“I am pleased that we have appointed two highly experienced executives in roles that are critical to how we take our new strategy forward. Our CIB business is an important driver of our growth ambitions across the continent while engineering services is central to the transformation of our business into a digitally-led bank in line with our strategy,” said Absa Group Chief Executive Officer, Maria Ramos.

Absa Group Limited, which has operations in 10 countries in Africa, opened the first of its branches bearing the refreshed Absa brand in South Africa today. This signals the start of a new chapter for the group and a major rebranding project in Africa.

Absa is no longer primarily a South African brand. Absa is now a multinational financial services group, representing banks in 10 countries, as it separates from the Barclays group. The new brand design is an expression of Absa’s new identity and purpose, which is ‘bringing your possibility to life’.

“This is an exciting time as we create a new Absa with a new brand design, fit for a forward-looking bank in a digital era,” said Maria Ramos, Absa Group Chief Executive Officer. “As we revitalise Absa, we are updating and refreshing entire network across South Africa over the next year or so.”

Absa is updating its branch set-up in line with its new strategy to be ‘customer obsessed’. The updated look is also more approachable, more dynamic and more vibrant with a wider spectrum of colours.

The first phase of rebranded Absa bank branches were revealed today at more than 30 key locations across the country. Other branches and assets, including buildings, forms and digital platforms are also being updated to reflect the new brand design.

Absa intends to rebrand its operations across Africa, most of which currently use the Barclays brand, by 2020, including more than 1,000 branches and 10,000 ATMs.  The project will likely be one of the largest rebranding programmes in Africa at this time.

The rebranding programme will not affect customers’ product of service functionality.

As Absa updates its branding, it is important for customers to be reminded that Absa will never contact them directly via phone calls (vishing) or emails (phishing) to request sensitive information such as their card PIN, card CVV or online banking password.

Absa will also never request customers to access their online banking profile via hyperlinks or attachments provided in an email and customers are reminded to carefully read security messages before accepting or rejecting them.

Customers who are concerned that an sms, email or call received may be fraudulent can contact the Absa Fraud Hotline on 0860 557 557.

Following recent press reports relating to Barclays Africa’s role as financial adviser on the sale of 9Mobile, Barclays Africa wishes to clearly state that these reports are inaccurate. This is not surprising, having come from so-called “sources” without authoritative knowledge of the process.

Barclays Africa has full faith and confidence in the fairness and transparency of the process it has run to date.

Contrary to media speculation, Barclays Africa has also not resigned its mandate in the transaction and remains committed to a speedy and satisfactory conclusion of the process.

The role companies can play in fostering education, helping governments meet their goals and contributing to economic growth across the continent was in the spotlight at the University of Free State, in Bloemfontein, on Tuesday, 26 September 2017. The University, in partnership with the Oliver & Adelaide Tambo Foundation and Absa, hosted a high-level dialogue session to discuss opportunities and education challenges facing, not only South Africa, but the African continent as a whole.

The dialogue, titled “Educating Africa’s Future”, was part of a series of debates which aim to unpack a range of socio-economic issues affecting South Africa’s, and the rest of the African continent’s development.

Panellists included Dr Pali Lehohla, South Africa’s longest-serving Statistician-General. The discussion was attended by various stakeholders, including academics, students, business and political leaders, policy makers, regulators, investors and keys stakeholders, all of whom addressed some of the issues affecting Africa’s education prospects.

Among the issues discussed were how Africa is faring when it comes to providing young people with the necessary quality education and skills that will expand their capacity, thinking, and expertise, enabling them to become more meaningful contributors towards the continent’s development.

Access to education

Dr Reaan Immelman, General Manager of Education and Skills at Absa, says the debate comes at a time when there is a continued focus on access to education – especially at tertiary level.

“Education is also a key pillar of our National Development Plan, which envisages that by 2030 – South Africans will have universal early childhood education. It also envisages quality school education across all levels, with globally competitive literacy and numeracy standards, as well as further and higher education and training that allows people to fulfil their potential.”

“This expanding higher-education sector should boost incomes and productivity, and shift South Africa towards a knowledge-based economy,” adds Immelman. There is also a target for a wider system of innovation that links universities, science councils and independent research and development institutions with priority areas of the economy, he says.

There is little doubt among economists, social scientists, politicians and business, that the key to stimulating economic growth and prosperity for all in Africa depends, in large measure, on our ability to pull together to ensure all Africans receive good quality education – from pre-primary through to tertiary. Importantly, the education offered needs to be far better aligned with the skills business desperately needs to fuel economies.

South Africa is not alone in making education a priority as part of economic growth: The African Union’s vision 2063 desires a “prosperous Africa, based on inclusive growth and sustainable development”.

Critical role

Immelman notes business has a very critical role to play, in collaboration with government, by helping improve knowledge and skills of workers by contributing to technical and vocational education and training. This will help boost local economies and build an appropriately skilled workforce.

“The Oliver & Adelaide Tambo Foundation debates, such as this one at the University of Free State, are not only relevant, but are also important in highlighting these issues and seeking sustainable solutions,” adds Immelman. As a bank , we have reaffirmed our commitment to economic and socio-economic growth on the continent through our Shared Growth strategy, pledging R210 million in 2017 through the Barclays Africa Group’s 2017 CEO Scholarship Fund. This will result in 3 000 university students across our ten African markets receiving a scholarship for the current academic year.”

Adelaide & Oliver Tambo Foundation CEO, Linda Vilakazi, says: “As part of commemorating the legacy of Oliver and Adelaide Tambo, and the immense contribution they made to the advancement of our society, we are delighted to deliver these debates.

“The idea is to generate critical conversations on some of the most important issues and challenges facing our country. This is in keeping with our beliefs that we must tackle our challenges head-on, and overcome them so that they do not keep us from achieving our potential.”