Amenfiman Rural Bank Limited at Wasa Akropong, in the Wasa Amenfi East district of the Western Region, has posted yet another remarkable operational performance by recording growth in almost all indicators.
Due to an aggressive expansion programme embarked upon for growth and prosperity of the business in the medium- to long-term, coupled with high cost of doing business, profitability of the bank dropped marginally during the year under review.
In spite of this, the Board of directors believes shareholders deserve to receive attractive results for their investments and have recommended a dividend payment of GH¢0.060 per share, which is the highest so far paid by any rural bank in Ghana – representing 30% return on shareholders’ investment considering a share price of GH¢0.20 per share.
The Chairman of the Board of Directors, Dr. Toni Aubynn, announced these at the bank’s 34th Annual General Meeting of shareholders held last Saturday.
According to him, even though the bank continues to apply attractive dividend to its shareholders year after year, the recent development on the banking landscape with respect to raising capital requirement for commercial universal banks by more than 300% calls for a review of the bank’s stated capital. “We will remain strategic and stay ahead of the game by raising our capital levels before any potential directive for a statutory increase in capital,” he added.
Dr. Aubynn reiterated that, as a first step, the board of directors wants to encourage all existing shareholders to increase their share values before potential investors from other sources actually come in. Amenfiman Rural Bank has in recent times attracted a lot of attention from the investing public including institutional investors – some of whom continue to express interest in equity participation; but the board believes that it is most appropriate to encourage existing shareholders to increase their respective capital contributions.
Dr. Aubynn hinted that the Board is targetting an increase in the bank’s capital from the current level of GH¢2.3million – which is far above the minimum threshold of GH¢1million required by every rural bank in Ghana now – to GH¢10million in five years. This, according to the Board Chairman, will provide cover for the bank’s anticipated growth; but in the short-term, the board is working to increase its capital to GH¢5million by 2019.
The bank continues to improve on its income generation with total operating income for the year 2017, hitting approximately GH¢37million compared to a little over GH¢30million in 2016 – representing 21% growth over the previous year. The Board and Management are investing in other diversified sources to further boost the business’s income generation in the ensuing years. Again, with the just-completed business expansion, the Board Chairman believes this is going to add to the banks income generation in the medium- to long-term.
Total deposits for the bank grew from about GH¢128.8million in 2016 to approximately GH¢148.8million, representing a growth of 15.5%. The bank chalked up this success in spite of extremely high competition from some investment companies.
However, the bank posted a profit before tax of approximately GH¢8.2million as against a little over GH¢9.9million in the previous year – representing a decline of 17.64%. Profit after tax for the year was around GH¢5.1million as against the previous year’s approximately GH¢8.9million – representing a decline of 42%. This was due to a higher tax rate of 25% applied for the first time, and other adjusting entries made during the year. Despite this development, the bank still maintains its position as the most profitable rural and community bank in Ghana.
The Board Chairman in his general outlook of the bank going into the future has stated that the next phase of growth is to develop digitally, using the appropriate digital financial services platforms. The bank has successfully installed 7 ATMs in seven locations and is still exploring the opportunities to expand ATMs, aiming to reach more customers using various ICT platforms.
Dr. Aubynn has stressed that as banks operating largely in rural areas, they stand ready to partner with various District Assemblies to implement the various government programmes – including Planting for Food and Jobs, and the One-District, One-Factory project. He therefore believes that the potential of rural banks as partners in development remains to be fully tapped by government.
He further took the opportunity to repeat his 12-year appeal to government, and directly to the Local Government Ministry, to channel portions of the District Assemblies’ Common Fund and other earmarked funds to some of the Rural banks – especially Amenfiman Bank, which has a proven track-record of managing larger funds and is also closest to the people.
“We have laid the appropriate foundation to drive business growth, innovations, and efficiency in order to provide better returns to our shareholders. We will continue to focus on Micro, Small and Medium Enterprises and farmers, especially women in business. We will develop more innovative products to serve our market,” he concluded.
The CEO of the Bank, Dr. Alex Asmah, in an interview with Business & Financial Times said the bank’s business focus in 2018 is on a sustained growth, innovations, efficiency and improved service as the main pillars in achieving profitability.
According to him, the banking industry in general is undergoing some reforms; and he and his team will spare no effort in ensuring that they stay focused on their growth path and challenge themselves to maintain or improve upon their current status as the leading rural bank in Ghana.
He has therefore emphasised that making enough profit and paying good dividend to shareholders is not only the primary focus of the bank; they are also very committed to their corporate social responsibility activities.
“We have the expertise in managing small businesses and petty-trading, and that has been our primary focus as a rural bank. When development occurs at the grassroot level it becomes a clear indication that the country’s economic outlook is brighter,” he stressed.
He emphasised that the bank will continue to pursue a massive share and deposit mobilisation, follow stringent cost-reduction policies, strengthen internal control measures, and develop the human capital to meet demands of functioning profitability in the competitive banking environment.