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Absa Capital reported a significant decline in earnings to R129m mainly as a result of a R1,1bn impairment raised against the carrying value of associate investments in Pinnacle Point, Blue Financial Services , Sekunjalo Investments and ConvergNet Holdings.
These shareholdings were acquired by default in December after a broker client failed to honour its commitments in single stock futures transactions. Vitalo said yesterday no further significant impairments were expected .
This was because R931m of the R1,1bn impairment was written off on the investment in Pinnacle Point in the first half, leaving Absa's carrying value at zero. The division's earnings fell 9,7% to R917m if the impairment was excluded.
On the growth of Absa Capital, Vitalo said they were generating more than four times the revenue pace of 2006, or in less than three years.
"We made more than double in the first half of 2009 than in all of 2006," he said.
Absa Capital's strength against its competitors lay in the fact that it could draw from the benefits of Absa's large retail banking business and provide the international technology, services, expertise and products available to clients of Absa's parent, UK-based Barclays.
Vitalo's other title is CEO of Barclays IBIM (Investment Banking and Investment Management) for the Middle East.
An example of synergies that could be evolved through Absa Capital and the wider Barclays group included the recent lead manager role in the financing and risk management transaction for the Victoria & Alfred Waterfront in Cape Town, which involved Barclays clients based in the UK and Dubai and the market expertise coming out of Absa Capital.
Another example of potential synergy was in the Absa Wealth private client business.
Much of Barclays' business in the Middle East involved very wealthy private clients who did differentiate between banking functions, such as private client banking and business banking.
These types of services would also be introduced to SA, where new wealth was being generated, said Vitalo.
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