Chief Executive Officer’s letter

We are building a thriving organisation, centred on diversity and inclusion, with growth firmly as our ambition.

Maria Ramos

Chief Executive Officer

On 1 March 2016 Barclays PLC announced its decision to divest from Barclays Africa so as to achieve regulatory deconsolidation, and has since achieved a shareholding of 14.9%. This decision paved the way for Barclays Africa to separate from Barclays PLC and at the beginning of 2017 we announced that we had secured a R12.6bn settlement to contribute towards the costs of doing so.

Barclays PLC also committed a cash contribution towards a future broad-based black economic empowerment scheme, the proceeds of which have already been utilised to establish an interim structure.

With this context we set three priorities for 2017:

  • Deliver on our business commitments under the existing One Africa strategy
  • Progress the Separation
  • Rethink our business strategy as a standalone African financial services group

Our focus remained on driving performance across all our businesses and we delivered a resilient set of results in 2017 with our normalised headline earnings increasing by 4% to R15.6bn1.

1 View our normalised financial results

Strong returns across a diversified portfolio

This satisfactory performance was delivered despite a challenging macro backdrop, with low economic growth in South Africa and in some of the other markets in which we operate:

  • Revenue growth of 1% and 3% in constant currency was modest in a tough macro environment reflecting dampened business and consumer confidence levels. Pleasingly though, our revenue momentum improved in the second half of the year particularly in our Retail and Business Banking (RBB) business in South Africa.
  • Continued cost discipline, saw our costs in increase by 4% or 6% in constant currency, which was in line with inflation across our markets. Nonetheless, this growth outpaced the revenue increase and contributed to negative operating JAWS.
  • As expected, our credit impairments improved materially reflective of our cautious asset origination over recent periods.
  • Our return on equity of 16.4% remained stable whilst our South Africa Banking and Wealth, Investment Management and Insurance (WIMI) businesses continued to deliver strong returns and our returns improved further in the Rest of Africa Banking business.

Overall, our 2017 results again reiterated the importance of a diversified portfolio of operations, both by activity and geography and underscores our strength as an organisation.

Continued focus on our business

Whilst we continued to manage the risks related to the separation process, we remain focused on the opportunities and strategy execution in each of our businesses.

In our RBB franchise in South Africa, our largest market, we kept focus on our turnaround strategy. We continued to focus on improving our customer experience, launching a Premium product, while enhancing existing offerings. We concentrated our efforts on system stability, efficiency and resilience to support customer service delivery across our network. We launched the new Absa banking app and customer uptake and transaction volumes increased by 62% and 83% respectively. We see significant opportunity for growth in app usage and transactions, actively encouraging our customers towards using mobile platforms. We also see further opportunities for cost savings in this business which will fund further investment into our front office, digital and data capabilities.

In the Corporate and Investment Banking (CIB) business in South Africa, we increased our banking income through strong performance in the advisory business, where fee income more than doubled following key deals in the mining, health and telecommunications sectors. Following strong growth in 2016, our Markets revenues were however lower given reduced client flows and market volumes as well as limited large event deals. However, the Corporate business, another focus area for us, continued to show good revenue growth having delivered double-digit compound revenue growth over five years. We see further growth potential in term lending, where we remain underweight, as we aim to win primary relationships to grow our transactional revenue and deposits.

In the WIMI business, earnings declined by 8% in 2017 mainly reflecting a single client credit charge in Wealth and catastrophe event claims. Positively, excluding these effects, our underlying business performance improved as we increased our underlying underwriting margins in the Short-term Insurance business in South Africa. We also improved our Life embedded value of new business, as sales through our South Africa bank branches grew strongly while credit life sales benefited from improved retail loan production in the second half of the year. Our assets under management in the Investment business also showed strong growth of 16%. Notably, we continue to refocus WIMI and in doing so, sold certain of our non-core business lines.

In our Rest of Africa Banking business, we continued to grow revenue and earnings faster than our South African business despite the effect of a stronger Rand. Earnings increased by 24% in constant currency benefiting from continued strong CIB revenue growth. The operations remain well-diversified across a broad portfolio of countries and this protected us against the difficult operating conditions in certain markets. Our return on equity from this business increased to 16.6% in 2017, a strong improvement from the 12.5% when we acquired it in 2013 indicating the value of this transaction to the Group. Improving the high cost-to-income ratio in RBB is a focus area and will improve these returns further.

Whilst we have made good progress in core areas, we still have more to do – particularly with regard to capturing RBB market share in South Africa and meeting our own aspirations on customer service and becoming customer obsessed.

The Separation

Effective 1 June last year Barclays PLC placed 33.7% of our shares in a second bookbuild. At R38 billion, it is South Africa’s largest-ever bookbuild. The transaction ended Barclays PLC’s controlling shareholder status, and allowed us to begin implementing the terms of the Separation Agreement.

While the Separation officially commenced on 6 June 2017, our planning and mobilisation efforts began in the weeks after the initial sell-down announcement in March 2016. The programme moved into execution phase early last year, and operational separation is now well underway.

Operational separation involves three key elements:

  • Identifying and addressing all the dependencies (‘Touch points’) we have on Barclays PLC.
  • Developing a new strategy to take us forward following Separation
  • Announcing the decision on what our brand is to be, and how we implement that decision across our markets.

You will find the further detail on the Separation in the Separation programme timeline. Our Transitional Services Agreement with Barclays PLC secures services for 36 months, allowing more than sufficient time to complete the Separation, including provision for contingency.

Charting a new way forward

The Separation has provided Barclays Africa with a once-in-a-lifetime opportunity to redefine our Purpose, set out a new business strategy and deliver a new brand that represents our Values and aspirations. Our ambition is to grow, to become a financial services group of which Africa can be proud.

During 2017 we have completed a strategic review, carefully assessing the untapped economic opportunities in both our current and potential presence countries. We have undertaken a situational analysis, identifying the capabilities that we need to extend and develop for the future.

The result of this is a firm decision to adopt a bold growth strategy, recognising the need to maintain our focus on driving revenue and return on equity.

The process has been an inclusive one. This strategy arose out of a special collaboration between management and thousands of employees from each of our businesses. Our employees’ feedback showed their hunger for growth – and that they understood that growing sustainably and becoming admired throughout Africa necessitated a cultural change across the organisation.

We have placed our employees and organisational culture at the centre of our strategy. The special collaboration was the starting point of a new approach, which is characterised by greater personal and business accountability and the desire to create a thriving organisation.

Let me briefly set out what we mean by growth. As Africa grows, our economies will expand, and the aspirations of the youngest population in the world will need to be met. We are determined to contribute to this trajectory and share in its success. This is about growth for both Africa and our business.

We are systemically important to the economies where we operate. We see ourselves as fundamental enablers: helping individuals, businesses and society, which is why we have defined our Purpose as ‘bring your possibility to life’.

More specifically, we aim to double our share of Africa’s banking revenues.

Our new strategy will require some operational and structural change and we will communicate the outcome of the assessment of these impacts and the resulting changes in due course.

Three strategic priorities

Fundamentally, this strategy is about growth. We will grow by focusing on three key priorities.

First, we want to build a thriving organisation centred on diversity and inclusion. This is a transformation of our thoughts, behaviour and actions. It goes to the heart of our DNA as a business.

We will create an environment that encourages our employees to grow and develop. In doing so we want them to be more entrepreneurial to the benefit of our customers, clients and other stakeholders.

Second, we aim to restore leadership in our core businesses. We have a diversified portfolio of businesses with a geographical footprint and customer base that gives us a strong platform from which to grow.

As we separate from Barclays PLC, building and scaling new capabilities, we will drive growth in both our established businesses as well as looking at new opportunities.

Building these capabilities consistently across our enterprise will see us regain our leadership position in South Africa Retail, become the Business Bank of choice, and expand our market share in Corporate and Investment Bank, where we already have an enviable network.

WIMI will also benefit, and will be seamlessly integrated into our customer-facing businesses.

Third, we will build new pioneering propositions:

  • We aim to deliver a superior business solution to Africa’s rapidly growing need for consumer finance. We are going to target this opportunity with our core middle and affluent customers, and we expect to grow our base in these segments.
  • We will build a single platform payments hub that is affordable, simple and intuitive, serving customers across the continent.
  • We will launch a winning transaction banking platform. It will work seamlessly with our corporate and small business propositions, providing great cash management and access to our trade finance products.

Three enablers

We will develop three enabling capabilities.

First, we are building a scalable, digitally-led business. We are passionate about innovation, technology and digital possibilities. We have already made significant investments and the Separation presents a further opportunity to bring the best thinking, skills, design and digital capabilities together to create a unique and differentiated business.

Second, we will help shape society. Our employees were clear that we must actively facilitate Africa’s growth and development, and to work with others to do the same.

We take our decision and responsibility to deliver shared growth seriously. We have already committed R1.4bn to education, building one of largest corporate university scholarship schemes with over 3 600 students having benefited.

We want to be an active force for good by:

  • Bringing fresh thinking and thought leadership that accelerates innovative solutions to societal challenges;
  • Contributing to our societies, the growth and development of Africa; and
  • Caring for our environment and helping others to do so.

Third, we will embrace a different, more commercial and entrepreneurial way of doing things. We will look to acquire and sell assets. As we expand in our target markets, we will consider appropriate acquisitions to support our growth ambition. We will also embrace strategic partnerships to explore new markets and add to our capabilities.


Redefining our identity has been integral in developing our strategy. As we separate from Barclays PLC it is time to address our future name and brand. Subject to shareholder approval in May 2018, the name of the holding company will change from Barclays Africa Group Limited to Absa Group Limited. This is an important and exciting step for us.

Even more exciting is the opportunity to change the name of all of our operating businesses, unifying them all under one common brand identity. Subject to the approval of our regulators, our new brand will be Absa.

When we reveal the new look and feel of our brand it will be an authentic representation of our African heritage, our footprint and the organisational culture we are building. We are bringing Africa into Absa.


We covered a lot of ground in 2017. While external factors influenced our ability to grow income, we remained focused on building momentum in the execution of our existing strategy, while accelerating the Separation and developing a bold new ambition that sets an exciting way forward for our business.

We know that this will take strong leadership and we are committed to building a leadership pipeline to minimise succession risk, transform our organisation and become the best place to work and grow for talented Africans.

I would like to thank my leadership team for their commitment during 2017 – a year in which the sheer volume of our work grew significantly. I am grateful to our Board for their continued support and guidance. I am also thankful to all our employees for their consistent commitment to our customers and clients.

Above all, I want to thank our customers and clients on whose custom we depend. We appreciate they have a choice.

In 2018, we will continue to prove our ability to compete in a rapidly changing world, particularly in a continent filled with such exciting opportunities as ours. We have an opportunity, to do something of great consequence, to build a banking group of which all of Africa can be proud.

We are building a thriving organisation, one with diversity and inclusion at its core, with growth firmly as our ambition. For myself and all of my colleagues, this is a once in a lifetime opportunity and we intend to seize it.