Republic Bank declares first dividend payout in 8 years

Farid Antar, Managing Director, Republic Bank
Managing Director of Republic Bank, Mr. Farid Antar

Shareholders of Republic Bank have unanimously endorsed the payment of a total dividend of GH¢0.025 per share – totaling GH¢21,299,000 – for the financial year ended December 31, 2021.

The endorsement, which was made at the bank’s 31st Annual General Meeting (AGM), and subject to final approval by Bank of Ghana (BoG), marks the first time since 2014 that Republic Bank has declared dividends.

According to the Ghana Stock Exchange-listed bank, the hiatus in dividend payment was a result of constraints brought about by the writing off of historical non-performing loans and the need to make the bank’s operations compliant with the prescribed governance framework.

Additionally, following the onset of the pandemic, the BoG issued a directive compelling banks and related institutions to suspend the declaring or paying of dividends for the 2019 and 2020 financial years, unless they met certain conditions.

“Our bank, has over the last few years, strenuously and painstakingly put in place exceptional and robust strategies to improve the profitability to deliver long-term value to shareholders. These strategies have begun yielding the desired results, leading to improved financial performance and a positive net income surplus,” Chairman of the Republic Bank Board, Charles William Zwennes, said.

He further stated that the bank had now met all the statutory and regulatory positions, and eliminated any other material impediment which could hinder its ability to declare or distribute dividends; adding that development marked a milestone for the lender.

Touching on the dividend payout ratio – the total amount of dividends paid out to shareholders relative to the net income of the company – of approximately 25 percent, its Managing Director, Farid Antar, explained that the bank had to be measured in the distribution of its profits. “While our policy allows for as much as 40 percent, we did not recommend that high because we have to keep an eye on the income surplus”, he remarked.

With the bank now in the position to pay dividends, two independent surveys were undertaken to assess the competitiveness of the remuneration of the bank’s directors relative to their industry peers. Subsequently, a recommendation was made and approved to increase their remuneration by 26.65 percent or GH¢210,440 per annum.

“On the back of recent improvements of the bank’s performance, and in view of the independent findings of the industry, this has been proposed to place the remuneration in line with the competition in the industry. It is worth noting that the upward adjustment is equivalent to merely 3.71 percent of the total dividend to be paid to shareholders,” Mr. Zwennes stated.

Financial performance

In the financial year under review, Republic Bank saw its profit after tax reach GH¢81.7million, up 58.26 percent from the figure recorded in 2020. Similarly, net interest income appreciated by 11.7 percent to GH¢287million in 2021.  Operating expenses – attributed to increases in software licensing and ICT costs, marketing, and advertising as well as general and administrative cost – however, recorded a marginal increase.

The bank recorded a 15.9 percent appreciation in the value of its total assets, closing the year at GH¢4.23billion, compared to the GH¢3.65billion recorded in 2021. This was spurred on largely by growth in cash and cash equivalents, as well as pledged and non-pledged assets. The net loans and advances portfolio went up by 14.38 percent from GH¢1.53billion in 2020 to GH¢1.75billion, with Corporate and Commercial loans driving the growth.

Additionally, total deposits from customers rose to GH¢3.17billion, while its non-performing loan (NPL) dropped from 19 percent to 15.32 percent during the year. The bank indicated that it plans to introduce new products to increase its deposit base and loan portfolio.

Republic Bank currently has 825 million outstanding shares, valued at GH¢0.6, as of the end of the trading in the penultimate week of April. Consequently, its market capitalisation stands at GH¢511.2million.

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