Nwabiagya Rural Bank Limited at Barekese in the Atwima Nwabiagya district of the Ashanti Region is putting up every effort practically possible to ensure resilience in its operations, so as to withstand the shocks of prevailing macroeconomic effects on their operations as a financial institution.
The bank aspires to make its business more resilient, better-managed by building a well-capitalised digital, liquid, profitable and efficient system with adequate buffers which enable the bank to withstand any adverse external shocks.
This would allow the bank to significantly reduce operational cost, which creates the financial capacity to invest in growth.
By this, the bank has undertaken a comprehensive transformational journey centred on processes, products, technology, people-capabilities, business strategy, risk management and compliance; and in this Covid pandemic situation, maintaining sustainable asset quality is the major challenge faced by the bank.
The Chairman of the board of directors, Maxwell Yeboah, made these known at the 33rd Annual General Meeting of shareholders held last Friday at the Barekese Community Centre at Barekese.
According to him, recognising the critical importance of controlling NPAs to a sustainable level as well as the credit risk management tools and strategies are priorities to make sure that management’s choices are delivering the expected returns.
He mentioned that a lot has been done on locked-up funds with the defunct investment firms, particularly with the establishment of an Investment Recovery Team that constantly follows up on the locked-up funds and has made very significant impact by recovering about GH¢6million of the locked-up funds.
The devastating effect of the COVID-19 pandemic pushed most countries into recession in 2020, with per capita income contracting more sharply in the largest fraction of countries globally since1870.
As per the IMF’s global economic outlook of June 2020, advanced economies are projected to contract by 8% in 2020 and 3% for developing economies. This would represent the weakest showing by this group of economies in at least sixty years.
However, the banking sector’s remained strong at the end of 2020 with robust growth in total assets, deposits and investments. The increase in total assets resulted in strong growth for investments in government securities.
Total deposits recorded significant year-on-year growth, reflecting strong liquidity flows emanating from the COVID-19 fiscal stimulus and payments to contractors. Overall, the pandemic’s impact on the industry’s performance seems moderate, as banks remained liquid, profitable and well-capitalised.
A series of policies and regulatory measures were put in place by the Bank of Ghana to loosen financing conditions, ease liquidity pressures and keep credit flowing to support critical sectors of the economy.
Those measures, according to the Board Chairman – including a reduction in the Policy Rate by 150 basis points, lowering the primary reserves by 200 basis points and dropping the Capital Adequacy Ratio by 150 basis points – were not only helpful, but also timely.
In spite of challenges confronting the banking industry, the bank’s loan portfolio increased by 4.04% over the preceding year’s figure of approximately GH¢40million, up to about GH¢41.8million.
The bank continues its policy of channelling more of its resources into risk-free investment, and has been able to increase its risk-free investments from GH¢26million the same time last year to GH¢54million currently; representing a more than hundred percent increase.
Despite the difficult operating environment, deposits grew by 28.71% from a little over GH¢114.6million in 2019 to about GH¢147.6million in 2020. Assets of the bank also recorded an appreciable growth of 28.08%, from GH¢122.3million in 2019 to GH¢156.6million in 2020.
The bank’s statutory reserve balance as at the end of the year 2020 was GH¢3.9million. The bank’s operations during the year under review recorded a pre-tax profit of GH¢1.2million, which constitutes a 60.84% improvement over the 2019 pre-tax profit of GH¢762,822.
On the flipside, the bank’s capital adequacy ratio as at end of the year under review improved marginally from -10.94% recorded in 2019 to -9.77% in 2020 – below the prudential requirement of 10%. Unfortunately, the bank recorded a post-tax loss of GH¢1,198,296 in 2020 compared to a post-tax loss of GH¢762,621 recorded in the 2019 financial year.
Corporate Social Responsibility
In line with the bank’s CSR Policy, it spent GH¢55,900 on socially responsible activities in the field of education, healthcare, etc. These projects included a Mechanised Borehole for the Barekese Asenie Community and Re-roofing of the Methodist Primary School Building at Achiase. The bank also donated some beds to Abuakwa Polyclinic, and also made cash donations to the Atwima Nwabiagya North District and Atwima Nwabiagya Municipal Assembly, aimed at supporting the welfare of needy and vulnerable persons in society who were unfortunately affected by the novel COVID-19 disease.
Payment of Dividend
In view of the BoG’s directive, the Board of Directors did not recommend members to approve the distribution of dividend for the 2020 financial year. This, according to the directors, is due to the Bank of Ghana’s directive to all banks and SDIs 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.
The CEO of Nwabiagya Rural Bank, Mrs Helen Yankey, in an interview told Business & Financial Times that management will continue to seek ways of strengthening and developing the banks’ operations to maintain the confidence that their numerous customers and shareholders have in it.
She mentioned that investments will be diversified to ensure safety and to utilise returns on assets and shareholders’ funds. Mrs Yankey said despite the competition in the banking industry and with its numerous challenges, particularly after the financial clean-up exercise and the effects of COVID-19, Nwabiagya Rural Bank will continue to support customers within its operational territories to improve upon their living conditions.