Otuasekan Rural Bank strategises to withstand shocks from COVID-19

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The General Manager, John De-Graft Owusu (middle) explaining a point to the Board Chairman, Dr Prince Stephen Adom Attakora (left) while the Vice Board Chairman Ignatius Kwamina Baidoo Jnr (right) listens

In its quest to surmount negative effects of the COVID-19 pandemic and continue to serve customers better, Otuasekan Rural Bank Limited at Kofiase in the Sekyere West district of  Ashanti Region has introduced mobile banking services whereby customers can transfer money from their bank accounts onto their mobile phones and also to another account in another bank.

The bank is therefore encouraging customers to patronise its Internet banking services in order to ease pressure at the banking halls and eventually reduce human contacts – which is the new normal primarily to mitigate social impacts of the coronavirus.

With these measures, the bank seeks to position itself to withstand the shocks that will come as a result of COVID-19 should the pandemic continue. The bank will continue to support its cherished customers by granting them loans to expand their businesses.

The Board of Directors Chairman, Dr. Prince Stephen Adom Attakora, said this and more at the bank’s 31st Annual General Meeting of shareholders held last Friday at Kofiase in Ashanti.

According to him, Ghana’s economy expanded in the year 2019. Gross Domestic Product grew by 8.79% at the end of year. The cedi was under pressure during the year under review, as a result of more demand for foreign currencies by importers.

The cedi cumulatively depreciated against the US dollar by 12.9% at end of year 2019, as compared with 8.4% in 2018. Government of Ghana Treasury-bills ended the year 2019 with a rate of 14.2% as compared with 14% in 2018. The inflation rate remained at single-digit. It ended the year 2019 with a rate of 7.9% as against 9.4% in 2018

In spite of the unfavourable macroeconomic environment in which the bank operated during the reviewed year, it managed to pull yet another satisfactory operational performance in almost all financial indicators for the year under review, as shown in the table.

    
Indicators20192018% Change
Deposit 76,062,849 66,146,441 14.99
Investment 45,256,979 40,892,892 10.67
Loans /Advances 28,362,826 25,266,62612.25
Total Assets 90,492,134 79,964,358 13.17
Stated Capital 2,412,484 2,225,092 8.42
Shareholders’ Fund 11635461 11548128 0.76
 Profit Before Tax 530101 2079557 74.46

 

The Board did not recommend dividend payment for the 2019 financial year, based on the Bank of Ghana’s Directive (Notice No. BG/GOV/SEC/2020/03) dated 20th April, 2020.

The bank continues offering assistance to communities and institutions within its catchment areas in terms of community development projects. In the year under review, it spent an amount of GH¢60,158 on corporate social responsibility activities toward stakeholders – with special focus on Education, Health and Security among others.

The bank’s Share Capital stood at GH¢2,412,484 as at end of the financial year 2019. This far exceeds the Bank of Ghana minimum requirement of GH¢1,000,000 by 141.25%. This makes the bank one of the most well-capitalised rural banks in Ghana.

The General Manager, Mr. John De-Graft Owusu, in an interview with Business & Financial Times said management will continue seeking ways of strengthening and developing the bank’s operations to maintain the confidence that their numerous customers and shareholders have in it.

“We will also intensify loan recovery, deposit mobilisation, internal controls; and maintain quality assets to increase profitability,” he stressed.

He mentioned that investments will be diversified to ensure safety and utilise returns on assets and shareholders’ funds. Mr. De-Graft Owusu said despite competition in the banking industry with its numerous challenges – particularly after the financial clean-up exercise and effects of COVID-19 – Otuasekan Rural Bank will continue to support customers within its catchment areas to improve upon their living conditions.

In an address, Mr George Kweku Annor – the ARB Apex Bank Kumasi Manager, on behalf of the Managing Director of Apex Bank, Mr Kojo Mattah, commended the shareholders, directors and management of Otuasekan Rural Bank for the impressive gains made in the 2019 financial year.

He mentioned that the banking industry has been undergoing some ground-breaking changes over the past few years. The RCB sub-sector has, however, showed a high level of resilience, because most of the banks have been performing creditably well.

Mr. Mattah believes that the RCBs’ resilience is also due in part to the positive, critical partnership and cooperation between three anchor institutions: The Bank of Ghana (BoG), ARB Apex Bank and Association of Rural Banks. The test for these member-banks, going into the future, is how best rural banks can be pragmatic in managing their own affairs.

Mr Mattah is however confident that the RCB model has come to stay, as the strategic role in supporting the forgotten middle to bottom in the pyramid of small and medium scale businesses is clear.

He believes that the only way the rural banking industry can continue to witness positive improvements and bring tangible dividends to the shareholders and communities where RCBs operate is a continuous improvement in the systems and processes for efficient business delivery.

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