Nwabiagya Rural Bank to surmount effects of financial clean-up and COVID-19

Maxwell Yeboah, Board Chairman, addressing shareholders during the meeting

The directors of Nwabiagya Rural Bank Limited at Barekese in the Atwima Nwabiagya district of the Ashanti Region have described the 2020 financial year as very challenging, and they are poised to surmount every negative effect from the financial sector clean-up and COVID-19 pandemic.

With the banking sector beginning to show signs of recovery with an enhanced public confidence, the board of directors have assured shareholders of continued driving and implementation of   initiatives aimed at navigating future growth and profitability.

It is therefore anticipated that the 2020 financial year will be very challenging regarding the contagious effects from the financial sector clean-up resulting in the revocation of some financial management companies’ licences.

Again, while devastating effects of the COVID-19 pandemic are also expected to impact adversely on the economy of Ghana in general, the Board is very optimistic about prospects for Nwabiagya Rural Bank due to untapped potentials in the industry.

The Board and Management are working efficiently to reposition the bank against industry challenges emanating from the banking sector clean-up and COVID-19 pandemic.

The Board is currently paying attention to these two major areas as a result of its desire to ensure accountability, prudent operations and investments, coupled with directives from the Bank of Ghana and ARB Apex Bank.

Chairman of the board of directors, Maxwell Yeboah, gave these optimistic assurances at the 32nd Annual General Meeting of shareholders last Friday.

He emphasised that the 2019 financial year was an eventful one, with particular reference to the major clean-up of the financial sector by regulators coupled with emergence of the novel coronavirus (COVID-19) pandemic.

This unfortunate development came with associated adverse impacts on operations of the financial sector, by which Nwabiagya Bank was also affected.

Mr. Yeboah however commended government for being mindful of investors’ plight and rolling out a bailout package for affected clients of those financial management companies; and Nwabiagya Rural Bank stands to benefit in due course from the bailout package to mitigate the negative impact.

In spite of the major economic challenges as well as many negative effects on its operations, the bank was able to register a very satisfactory performance in almost all indicators.

Operational performance

The bank’s loan portfolio increased by 6.69% over the preceding year, up to about GH¢40.1million; and it has been able to channel more of its resources into risk-free investments to the tune of GH¢26million, which is a marked improvement from what was a loss.

The bank’s Deposits grew by 5.95% from approximately GH¢108million in 2018 to a little over GH¢114million in 2019.

Assets of the bank also recorded a modest growth of 3.04%, from about GH¢131.7million in 2018 to a little over GH¢136.8million in the 2019 year under review.

The bank’s share capital also appreciated, by 3.04% over the 2018 figure of approximately GH¢2.7million – closing the year at a little over GH¢2.8million, which far exceeds the minimum threshold; and with a statutory reserve balance at end of the year 2019 standing at approximately GH¢3.9million.

On the other hand, the bank’s capital adequacy ratio as at the end of the year under review stood at 7.46%, which is below the prudential requirement of 10%.

Unfortunately, the bank recorded a loss of GH¢487,080 in 2019 compared to a profit of GH¢1,088,711 for the 2018 financial year – primarily due to the impairment of financial assets occasioned mainly by the locked-up funds.

Payment of Dividend 

In view of the BoG’s directive and the loss recorded in 2019, the Board of Directors did not recommend members to approve the distribution of dividend for the 2019 financial year. This, according to the directors, is due to the Bank of Ghana’s directive to all banks and SDI’s issued on 20th April, 2020 per its Notice No: BG/GOV/SEC/2020 to desist from declaring and/or paying any dividends or distributing reserves to shareholders for the 2019 and 2020 financial years, with the primary reason being to preserve capital and liquidity.

Meanwhile, the Board, Management and Staff have assured shareholders that they will work assiduously to return the bank to its former path of profitability to guarantee payment of dividends in the near future.

Corporate Social Responsibility

The bank continues to provide support to communities and institutions within its catchment areas. It spent an amount of GH¢64,515 during the year under review to support various programmes. However, this was a drop from the 2018 figure of GH¢175,642 due to the bank’s financial difficulties.

General Manager of the bank, Mrs. Helen Adjei Yankey. in an interview with Business & Financial Times said the bank’s business focus in 2020 is on driving growth, innovations, efficiency and service as the main pillars in achieving profitability.

She has emphasised that the bank will follow stringent cost reduction policies, strengthen internal control measures, and develop the human capital to meet demands of functioning profitability as well as achieving the objective of overcoming shocks from the clean-up and COVID-19 pandemic with its devastating effects.

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