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* H1 headline EPS up 10 pct, in line with forecasts
* Rest of Africa earnings up 34 pct
* Credit impairments down 7 pct
* Shares up nearly 30 pct this year (Recasts, adds details and quotes)
By Helen Nyambura-Mwaura
JOHANNESBURG, July 30 (Reuters) - Barclays Africa Group is focusing on lending to companies in South Africa tocounter a drop in retail credit as the financial health ofhouseholds in its biggest market deteriorates.
The pan-African lender, majority owned by the eponymousBritish bank Barclays, is also looking to the eight new markets it acquired last year to boost profit but facescompetition from rivals.
Barclays Africa Group posted a 10 percent increase infirst-half earnings on Wednesday, driven mainly by revenuegrowth from its newly integrated African operations and a dropin bad debt charges in South Africa where it tightened lendingcriteria.
Barclays, South Africa's third-biggest lender by marketvalue, is the first of the "big four" banks there to reportfirst-half earnings.
Heavily indebted consumers in South Africa, the continent'smost advanced economy, are under pressure from price increases,high unemployment and rising interest rates. The central bankhas increased rates by 75 basis points this year to 5.75percent, despite anaemic growth.
Barclays Africa Chief Executive Maria Ramos said the bankwas taking a conservative approach to its retail business.
Retail mortgages fell by 2 percent and personal loans grewby a mere 2 percent in the first half. By comparison, corporateand investment bank lending rose by 19 percent.
"We're being cautious, being very mindful particularly inSouth Africa... where we are very conscious that consumersremain under significant pressure," she said.
Barclays said customers in South Africa fell 7 percent to9.2 million in the first half and rose 2 percent elsewhere onthe continent to 2.7 million.
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Under a deal concluded last year, Britain's Barclays handedover ownership of all but two of its African subsidiaries to itsSouth African unit in exchange for a 62.3 percent stake in thenew combined entity.
Barclays Africa now owns operations in Ghana, Botswana, Kenya and Zambia and runs Egypt and Zimbabwefor its parent company.
"The acquisition of the Barclays Africa assets certainly wasbeneficial," said Reuben Beelders, a Cape Town-based portfoliomanager at Gryphon Asset Management who does not own Barclaysshares.
"A lot of the growth seems to be coming from that part ofthe business, but they also caution that the environment isbecoming more competitive and there is more regulation impactingtheir operations in the rest of Africa."
Barclays said revenue from the continent rose 12 percent inthe first half to end June, accounting for a fifth of totalrevenue and on track to hit targets set for 2016.
Headline earnings from the rest of Africa grew by 34 percentto 1 billion rand ($94.36 million), faster than the 6 percentgrowth in South Africa.
Overall headline earnings per share rose to 720.9 cents froma restated 655.7 cents a year ago, in line with forecasts.
Credit impairments fell 7 percent as it reined in bad loans,which spiked in the last two years following a surge ofunsecured lending by South African banks.
Analysts' median long-term EPS growth estimate for Barclaysis 7.6 percent, according to Thomson Reuters data, lagging 13.5percent for peers.
Its shares have gained nearly 30 percent so far this year,beating an 18 percent rise in the South African banking index.
"There's not huge amounts of value in this share any more,"said Beelders, who rates the stock "neutral."
($1 = 10.6020 South African Rand) (Editing by Erica Billingham)
