BARCLAYS YEAR ENDING 31 DECEMBER 2009

Results Summary - Operated with caution through 2009. The banking giant posted a

fair set of results given they had made a conscious decision not to be adventurous in

the year. They preferred not to be the market leaders in terms of lending and found

themselves taking only 3% of the loans market share from 10% of deposits. As such,

the group made a mere $1,2m in net interest income and $16,4m in non-funded

income (transaction and structure fees). This took their total income to $17,2m while

total expenses were $17,2m of which 56% went towards wages. They posted an EBIT

of $611,382, PAT of $1,4m and comprehensive income for the year of $1,8m. Their

balance sheet remained solid at $169,3m with a NAV of $32,2m. Their deposits sat at

$121m while advances were $20,3m.

Outlook - New products and increased customers to boost revenues. Management

is sticking to the strategy of focusing their attention on non-funded income by rolling

out 8 products to boost management fees. They have so far launched the

International VISA Card, MasterCard, ZimSwitch compatible cards and

Bancassurance. In addition, they forecast a 100% increase in retail customers from

100,000 to 200,000 (previous high was 340,000). Their optimism comes in the fact

that already they have for the month of January, increased their customer base by

10% to 110,000. Their costs are not likely to change much as they have no

anticipation to spend any extra cash to activate these products, nor do they have any

strategy in place to significantly reduce costs besides a marginal removal of

redundant staff. As such, they forecast revenues to double while expenses remain

fairly constant.

Value and Recommendation – 20% premium to region needs further clarity. Based

on these forecasts we can draw that the group will most likely make revenues of

$32m and post pretax profits of $15,5m. After all deductions, they should post a

profit for the year of $11,4m. This implies a forward PER of 13,1x, 19% above the

regional average of 11x. Their strong balance sheet and links with parent Barclays Plc

may justify their premium to the local market but this argument holds little water

when looking at the investment in terms of regional comparatives. This is worsened

by the fact that Barclays Zim is not aiming at being aggressive to exponentially

increase their revenues. Our view on them is purely for portfolio stability as their

downside risk is limited because scrip is tightly held. As such, we maintain our

ACCUMULATE recommendation on them.