…posts GH¢6bn balance sheet, CAR at 20% for 2022
United Bank for Africa (UBA) has announced that it finished 2022 with a capital adequacy ratio (CAR) of 20.2 percent, which is twice the minimum requirement set by the Bank of Ghana (BoG) as well as the 16.6 percent industry average for December 2022.
Its liquid position comes amid concerns over the ability of banks operating in the country to meet their short and medium-term obligations due to the domestic debt exchange programme (DDEP),
UBA’s Board Chairman, Kwaku Awotwi, made this known during the bank’s 2022 Annual General Meeting (AGM) in Accra. The bank’s annual report also revealed that the bank’s healthy liquidity ratio was 75.4 percent in 2022, despite a drop from the 86.9 percent recorded in 202.
According to Mr. Awotwi, the bank’s performance demonstrates the resilience of its business model and its healthy balance sheet. “As evidence of the resilience of our business model and healthy balance sheet, the bank remains liquid and well-capitalized in the face of the phenomenal challenges which have been experienced during the year. The bank ended 2022 with a capital adequacy ratio of 20.2 and a liquidity ratio of 75.4 percent”.
He added that the bank’s liquidity and capital adequacy ratios place it in an excellent position to take advantage of any opportunities that may arise in the future.
The BoG lowered the capital adequacy ratio from 13 percent to 10 percent in December 2022 to mitigate the impact of the DDEP on banks. Subsequently, banks with a CAR of less than 10 percent were asked to submit recapitalisation plans to the regulator.
UBA closed the period with a balance sheet size of GH¢6.2 billion, a 16 percent improvement over the GH¢5.4 billion recorded in 2021.
This was propelled by the bank’s net operating income which increased by 51.8 percent to GH¢682 million from GH¢449.5 million during the previous year. The increase in net operating income is attributed to the bank’s efforts to increase risk assets, which led to a 51.2 percent increase in gross loans and advances, from GH¢1.14 billion to GH¢1.726.2 billion.
This led to an interest income of GH¢799 million in 2022 versus the GH¢507 million recorded in 2021.
However, the bank’s pre-tax profit declined by 58.3 percent, from GH¢281.8 million in 2021 to GH¢91.2 million in 2022 despite additional provisions of GH¢267 million as a result of “significant impairment losses resulting from the Government of Ghana’s domestic debt exchange programme.”
The bank’s impairment losses for the period increased by a total of GH¢311.4 million, with GH¢282.1 million of the value – representing 90.6 percent – being an impairment on the Treasury’s securities.
UBA grew its customer deposits by 16 percent in 2022 to GH¢4.7 billion, from GH¢4.1 billion in 2021. A perusal of the make-up of deposits shows that savings deposits accounted for 7.9 percent, demand and call deposits, 60.4 percent and fixed deposits, 31.5 percent.
Non-performing loans (NPLs) saw a significant reduction from 29.4 percent in 2021 to 15.8 percent.
The bank also increased its shareholders’ funds from GH¢1.13 billion in 2021 to GH¢1.19 billion in 2022, representing a 5.2 percent growth rate. However, no dividends were declared for shareholders.
On his part, Managing Director/Chief Executive Officer, Chris Ofikulu, said the bank’s main focus for 2023 and beyond is to concentrate on areas it can improve that would enable it to respond more effectively to its operating environment. He added that this would allow them to focus on delivering improved performance and achieve better returns for shareholders over both the short and long term.
“We will continue to work hard to strongly transform our banking operations and simplify our processes. We remain committed to building a global bank that serves the needs of our cherished customers while making an impact in the communities we operate,” he said.
Directors of UBA at its 2022 AGM