RCBs see growth in deposits amid COVID-19

Kojo Mattah, MD, ARB Apex Bank

The rural and community bank subsector of the financial industry continues to show signs of resilience despite the punitive impact of the COVID-19 outbreak on the economy, recording some modest growth in deposit mobilisation.

The subsector recorded a total of GH¢4.32billion as at end of the second quarter 2020, the Managing Director of ARB Apex Bank, Mr. Kojo Mattah, has announced.

The 23.1% year-on-year trend of growth for RCBs’ deposits followed from an increase of GH₵2.85billion recorded at the end of 2017 – to GH₵3.83billion recorded in 2019.

Total loans and advances also increased, from GH¢1.56billion to GH¢1.69billion, while total assets surged from GH¢4.27billion to GH¢5.1billion over the same period with recorded growth rates of 8.3% and 19.4% respectively.

This remarkable performance, recorded amid the disruptions experienced in the financial sector during recent times, according to Kojo Mattah, is evidence that customers still have confidence in RCBs and can do more when things normalise.

The upward trend of growth is attributed to existing customers and customers of defunct banks, Micro-Finance Institutions and Finance Houses who have become comfortable in moving their investment options to RCBs.

It follows the Bank of Ghana (BoG) and ARB Apex Bank’s efforts to assuage fears among customers about their mutual support for the operations of RCBs.

The Apex MD observed that resolving the banking sector crisis, leading to the strict and equitable application of regulations to players in the sector, has caused the RCB subsector to sit up to its responsibilities.

Key among these is the BoG’s new Corporate Governance Directives, of which the RCBs’ version is undergoing final consultations.

“Much as some of the directives – particularly those about the length of stay for Directors and Managers of RCBs – have brought an uneasy calm to the sector, I believe this will open opportunities for the infusion of fresh energy and ideas into our banks,” he noted.

However, he said: “Directors and General Managers who are affected by the Directives’ coming into force will still be relevant in the development and progress of our communities in general, and RCBs in particular, as they put their experiences gathered over the years to other uses”.

Against this backdrop, Mr. Mattah – who was speaking at the 21st Biannual General Meeting (BGM) of the Association of Rural Banks in Kumasi – commended the BoG for its bold initiative of cleaning up the sector and restoring much-needed confidence back into the banking system.

While appealing for RCBs to leverage modern technology in growing their customer-base, he also asked them to expedite the processes for listing on the Alternative Stock Exchange. He said it provides unique opportunities for RCBs to list and trade their shares for members of the public.

The Ghana Alternative Market (GAX) is an innovative market operated by the Ghana Stock Exchange (GSE), with a focus on businesses with high potential for growth. It accommodates companies at the various stages of their development, including start-ups and existing enterprises – both small and medium.

Among other advantages, he said, it provides shareholders with a ready market should they want to dispose of their shares.

Also, it offers RCBs a stress-free platform to raise capital from diverse investors for investment into projects such as branch expansion, ICT, modernisation, and standardisation of operations among others.

“Let us utilise this opportunity to help diversify our banks and make them more liquid and solvent, so as to take our rightful positions as key players in the financial services sector of the economy.”

The 21st Biennial General Meeting (BGM) of the Association of Rural Banks was held under the theme ‘Financial Sector Reforms and its Impact on Rural Banking – Challenges and Benefits’.

President of the Association of Rural Banks, Mr. D. O. K. Owusu – also speaking at the ceremony, said the efficient management of RCBs for desirable impacts on stakeholders depends on a number of things. These include the level of commitment, integrity, adherence to operating norms and visionary leadership exhibited by the directors, management and staff.

He said the ARB is generally impressed by RCBs’ performance in the area of deposit mobilisation, which found corresponding reflection in the growth of Loans/Advances and Total Assets.

“The RCBs are required to exercise due diligence in credit management practices in order to remain efficient to sustain profitable operations.”

Leave a Reply