The managers of GCB Bank have moved to allay fears over the sustainability of its loan asset quality as measured by its Non-Performing Loans (NPLs) ratio in the 2021 fiscal year.
Despite the impressive growth in the bank’s assets value and a corresponding rise in its net profit, the state-owned lender saw its NPLs close the year at 15.98 percent; almost doubling the 8.71 percent recorded during the previous year and marginally higher than the industry average of 15.2 percent.
But in an interaction with key stakeholders when the bank took its turn at a Facts Behind the Figures session organised by the Ghana Stock Exchange (GSE), GCB Bank’s Managing Director, Kofi Adomakoh explained that the bank took the decision to impair its two most challenged facilities in the first half of 2021.
“We had two key accounts that had challenges due to the pandemic. These are project finance facilities in the hospitality industry and in the retail space, and due to the closure of the border and related issues, we could not go on the project as planned… by the time things eased up, cost-related challenges and other overruns had cropped up. We took the decision not to wait for things to get worse but to impair these facilities as we work with the promoters,” he explained.
The GCB MD added that the two facilities were fully provisioned for and the bank continues to work with the promoters to bring the projects to fruition and subsequently release the impairment provisions.
When both projects are discounted, however, the bank’s NPL ratio is about 13 percentage points lower, at around the three percent mark.
Touching on the bank’s exposure to further risky loans, particularly from its interactions with bulk-distributing companies (BDCs), Mr. Adomakoh stated that despite an appreciable level of business, the possibility of loan defaults by the oil distributors was almost non-existent, as the bank had structured the facilities with the highest risk assessment standards.
On his part, Deputy Managing Director of GCB Bank, Socrates Afram said despite the unfavourable macroeconomic conditions, the bank will treat loan applications on a case-by-case basis and promised it will remain inclined to grant facilities to customers with bankable projects.
G-Money
A crucial tool in digitalisation drive, GCB said its G-Money platform now has 2.2 million registered customers, up from 1.4 million in 2020, with corresponding agents growing from 16,000 to 25,000 year-on-year.
The bank also indicated that it will be participating in the Ghana Pay platform, an industry-wide collaboration for mobile wallets.
On how this ties into the future of its G-Money platform, it said, “The way we see G-Money is that it plugs into a wider ecosystem strategy. It is just one solution and wherever our customers need solutions, we will provide them. At the same time, we will roll out unique offerings through G-Money.”
GCB Bank seeks to cement its position as the lead bank in the retail segment and grow its share of the market in corporate banking, its MD disclosed.
The Managing Director of the GSE, Ekow Afedzie commended GCB Bank for its performance druing the cause of the year and expressed belief that the information-sharing session will reflect on the share price of the bank.
GCB is currently trading at GH¢5.12, down 2.29 percent year-to-date, despite posting an operating income growth of GH¢2.3 billion in 2021 and a Price-to-Earning Ratio of 2.37.
