Banks in Ghana continue to make huge profits post-banking sector reforms, signaling some positive times ahead.
According to unaudited financial statements released by some banks, profit margins either almost doubled or increased by some reasonable margins. So far, the quarter three financials indicate that majority of the banks have registered significant gains. GCB, Consolidated Bank, Ghana (CBG), Stanbic, ADB, Prudential, FBN, Cal, UBA, Republic Bank and Societe Generale have all recorded some impressive results.
Carefully going through the balance sheet, Business Finder noticed some banks invested heavily in the excess capital as a result of the increment of the minimum capital requirement in short term securities, particularly treasury securities. 91-day and 182-day Treasury bills are presently going for 14.16 and 14.0 percent respectively.
At the same time customer deposits also shot up for all, indicating growth in deposit mobilization.
GCB continues to benefit from the takeover of Capital and UT Bank with a 44.7 percent increase in its bottom-line. Profit increased from GH¢153 million the previous year to GH¢222 million at the end of September 2019.
This was as a result of significant growth in interest income and substantial reduction in interest expense, as well as a 42.1 percent growth in non-funded income. GCB inherited a portfolio of expensive deposits from both Capital and UT Bank. Interest income shot up from GHc997 million in quarter three 2018 to GHc1.1 billion in quarter three 2019.
The balance sheet continued to remain strong with a balance sheet size of GHc20.8 billion. Total assets is estimated at GHc11.1 billion whilst total liabilities hit GHc9.6 billion in September 30, 2019.
The bank’s liquidity ratio however dropped from 111 percent in September 2018 to 99 percent in September 2019, but still remained on the high side.
Non-Performing Loans rather inched up to 7.1 percent at the end of quarter three 2019, from 4.6 percent a year before.
Consolidated Bank, Ghana
Consolidated Bank, Ghana (CBG) recorded a sizeable profit following the amalgamation of seven banks by the Bank of Ghana.
It registered a GH¢64.9 million profit in the first nine months of 2019. This was achieved as a result of significant growth in interest income, primarily from investments in government securities. The bank had GHc6.4 billion in government securities.
CBG also recorded some appreciable growth in trade of GH¢44.3 million. Fees and commission income was also estimated at GH¢24 million.
The balance sheet also is strong with a size of GH¢14.3 billion (GHc7.4 billion in assets and GH¢6.9 billion in liabilities). Deposits from customers stood at GH¢5.4 billion whilst loans and advances was a paltry GH¢37 million. Stated capital stood at GH¢450 million.
For stability ratios, Capital adequacy ratio was 30.04 percent wand liquidity ratio was 82 percent.
Following approval by shareholders at its Extra-ordinary General Meeting in September, ADB has finally recapitalized its stated capital to GH¢571 million. This is against GH¢275 million a year ago.
The indigenous bank registered a slight drop in profit but a significant one. It recorded GH¢34 million in profit in quarter three 2019 as against GH¢38 million in quarter three 2018.
The reduction in profit was a result of 13 percent increase in operating expenses to GH¢110 million.
Capital Adequacy Ratio went up from 14.57 percent in September 2018 to 15.87 percent, signally a stronger bank. Non-Performing Loans was still high at 42.32 percent in September 2019, compared with 41.39 percent a year before.
After bouncing back to profitability a year ago, Republic Bank continues to enjoy growth in its bottom line.
Profit more than doubled by 114 percent to GH¢44.7 million at the end of September 2019. This is compared with GH¢20.8 million the previous year. The significant growth in profit is as a result of quantum growth in interest income, mainly as a result of increase in loans and advances.
For the balance sheet, deposits from customers increased to GH¢2.2 billion in quarter three 2019, as against GH¢1.75 billion in quarter three 2018.
Loans and advances also went up to GH¢1.36 billion, from GH¢1.1 billion in September 2018.
For the robustness of the bank, Capital Adequacy Ratio of the bank stood at 28.22 percent in September 2019 as against 34.69 percent a year ago.
Republic Bank has one of the largest liquidity ratio of 180.97 percent in the banking industry. NPL remained virtually unchanged at 18.66 percent.
The tier one bank saw its profit inching up significantly by 36 percent to GH¢221 million in quarter three 2019.
The substantial growth was as a result of a quantum leap in growth of interest income and trading income (non-funded). Whilst interest income went up from GH¢341 million in September 2018 to GH¢418.3 million in September 2019, trading income also went up from GH¢97.8 million in September 2018 to GH¢142 million at the end of September 2019.
The balance sheet remained stronger with a balance sheet size of GH¢18 billion.
NPL went down significantly from 22.1 percent a year ago to 7.94 percent at the end of quarter three 2019. Capital Adequacy Ratio stood at 15.71 percent as against 22.23 percent the previous year.
Indigenous bank, Prudential Bank which enjoyed support from the Ghana Amalgamated Trust (GAT) to recapitalize also recorded a 20.1 percent increase in profit to GH¢22.8 million in quarter three 2019. The increment was due to a combination of growth in interest income and trading income.
The balance sheet also remained stronger with a size of GHc5.2 billion. Total assets stood at GHc2.9 billion as against GHc2.3 billion a year ago and total liabilities stood at GHc2.3 billion as against Ghc2.1 billion the previous year.
The bank’s stated capital now stands at GHc402 million, compared with GHc127 million a year ago.
Capital Adequacy Ratio is now 20.34 percent, as against 10.45 percent a year ago, whilst NPL stood at 16.58 percent compared with 15.22 percent the previous year.
The banking industry recorded profit of GH¢1.67 billion during the first half of 2019, representing a year-on-year growth of 36.3 percent compared with 21.7 percent the same period last year.
The strong profit performance was underpinned by higher growth of net interest income, the Bank of Ghana stated. Net interest income grew by 20.7 percent reflecting both higher interest income from investments and lower interest expenses from reduced borrowings.