Republic Bank Ghana has seen a general slowdown in the growth of its profit for the 2018 financial year following a surge in its loan impairment provision to GH₵57.7 million in the year under review.
The bank declared a marginal increase in its profit after tax to GH₵37.44 million in 2018 from GH₵36.92 million in 2017, representing a 1.4% increase.
Republic Bank Ghana also recorded a 37.4% increase in its assets to GH₵2.85 billion in 2018 from GH₵2.08 billion in 2017.
Additionally, the bank ended the year under review with a Capital Adequacy Ratio (CAR) of 34.4%, well above Bank of Ghana’s regulatory minimum and comfort levels of 10% and 12%.
This was disclosed by the bank’s board chairman, Charles William Zwennes, at its annual general meeting, held in Accra yesterday.
According to Mr Zwennes, the bank’s liquidity position remains “healthy for normal banking operations” during the period under review.
“Management, in line with the bank’s risk strategy, adopted effective liquidity risk practices and kept a prudent level of liquidity,” he added.
He indicated that the strategic initiatives the bank pursued from 2015 to 2018 is what has contributed to its transformation, and that helped it “better weather challenging times”.
The board chairman announced that despite making profits, the bank will pay no dividend as it continues to firm up its financial performance.
Commenting on the bank’s huge loan impairment for the period, General Manager, Finance and Strategy at Republic Bank Ghana, Benjamin Dzoboku explained that this affected the bank’s operations in that year.
“The loan impairment is what reduced the bank’s operating income.
People were not paying back their loans. As a result, we have adopted a strict loan risk assessment going forward,” Mr Dzoboku said.
Since the Trinidadian Republic Bank acquired a controlling stake of erstwhile HFC Bank in 2015, the bank made loses in that same year and in 2016.
However, Republic Bank Ghana bounced back to profitability in 2017 when it recorded profits (GH₵36.92 million) for the first time in three years. And in 2018, its profit growth slowed to just 1.4% increase.
Aside these internal challenges, the year 2018 was one of the toughest years for most banks operating in Ghana.
It was the year of the deadline for all commercial banks to meet the Bank of Ghana’s new minimum capital requirement of GH₵400 million.
Credit: The Finder
(By Raju J. R. PARWANI)