Société Générale posts GH¢282m in pre-tax profit for FY 21

Societe Generale Securities Services
Societe Generale Ghana Plc is expanding its securities custody offering in Ghana, drawing on the expertise of Societe Generale Securities Services (SGSS).

Société Générale Ghana (SOGEGH) recorded a profit before tax (PBT) of GH¢282 million for 2021, a 27.22 percent over the corresponding period in 2020, according to its audited financial statement for the year, which was made available to investors through the Ghana Stock Exchange (GSE).

The statement further revealed that the lender closed the accounting period with a post-tax profit of GH¢184 million, a 19.53 percent appreciation over the GH¢154 million recorded the year before.

The bank’s interest income dipped marginally – by 1.63 percent – to close the year at GH¢510 million. This comes even as the value of its loans and advances to customers fell by 2.26 percent to GH¢2.5 billion, on a year-on-year (YoY) basis.

Fees and income expense grew by an almost negligible 0.42 percent to GH¢77.4 million for the period, whilst deposits from customers shrunk by 2.59 percent YoY to end the year at GH¢ 3.39 billion. The bank recorded strong growth in ‘other operating income’ at GH¢91 million, this was attributed to a reversal of some provisions related to the bank’s technological service fees.

SOGEGH’s capital adequacy ratio (CAR) remained well above the minimum regulatory threshold of 11.5 percent ending the year at better than the industry average at 22.3 percent. It’s Gross Non-Performing Loan Ratio, however, increased from 6.72 percent in 2020 to 7.58 percent.

Mixed bag

Investment managers, Databank, in its comments on the performance of SOGEGH, described the numbers as ‘lackluster’, particularly on the back of its fourth-quarter performance, where it recorded a post-tax profit of GH¢42 million, which fell below Databank’s forecast by around 38 percent.

SOGEGH’s “weak performance” for the period was attributed to a 13 percent decline in net interest income, a higher-than-expected operating expenditure (Opex) which had increased by 29 percent YoY, as well as higher impairment charges.

The bank’s full-year post-tax profit was also lower than Databank’s forecast by around 13 percent. “We are quite disappointed with the bank’s 4Q21 financial results, given the lower-than-anticipated core earnings led by the contracted credit portfolio. SOGEGH’s credit portfolio contracted, contrary to the management 2021 guidance to soften its tight stance on credit expansion and drive interest income,” Databank said.

“Additionally, we note that the bank’s overall earnings were heavily cushioned by the provision reversal worth GH¢92million for FY21, which we view as a one-off gain. However, we believe the solid fundamentals and the ongoing economic recovery should provide the bank leverage to ease its tight stance on lending in the subsequent quarters to drive profitability,” the report signed off by Analyst, Gideon Amoaning-Kyei added.

SOGEGH’s stock saw an 87.5 percent price appreciation in 2021 but has traded flat at GH¢1.20 since the turn of the year. Its market capitalisation at the end of trading in February stood at GH¢851 million.

Leave a Reply