ADB bounces back from DDEP, posts significant half-year profit

ADB to strengthen agribusiness financing as it launches new corporate strategy
Alhaji Alhassan Yakubu-Tali ,MD ADB
  • Unveils strategic plan to drive growth

The Agricultural Development Bank (ADB) recorded a profit before tax of GH¢71.8million in the first half of 2023 compared to GH¢57. 2million during the same period of 2022.

The bank’s performance improvement during the first six months of 2023 highlights progress the agriculture focused lender has made after being negatively impacted by the Domestic Debt Exchange Programme.

The bank attributed its gains in the face of a current challenging operating environment to the new strategic plan introduced at beginning of 2023.

Strategic plan

Highlighting the state-owned lender’s resilience and commitment, Managing Director-ADB, Alhassan Yakubu-Tali, outlined the bank’s strategic plan at the 2022 annual general meeting held in Accra.

He said the plan reaffirms ADB’s readiness to tackle hurdles of the ever-evolving financial landscape while maintaining its legacy of success.

“The cornerstone of our competitive advantage lies in our history and enduring relationships with our customers. We are resolute in nurturing talent and generating opportunities through the dedication of our staff. As we stride into the future, our unwavering focus remains on serving our customers and shareholders, and upholding the financial system’s stability,” Mr. Yakubu-Tali emphasised.

The key highlights of ADB’s 2022 financial year were underscored, shedding light on both successes and challenges. However, the bank’s ambitions for 2023 are steadfast; guided by their new Strategic Plan titled ‘Going Above and Beyond the Predictable’.

The plan outlines aims to improve financial performance, enhance risk management and elevate customer service standards. ADB intends to provide unparalleled convenience, top-notch service and a diverse range of financial products via advanced electronic channels. Efforts to streamline organisational functions and bolster accountability are in motion, with resources allocated strategically to value-generating activities.

Capital injection stands as a priority within the Strategic Plan. ADB sees this as an opportunity to emerge fortified, ready to support governmental initiatives in the realms of manufacturing and agriculture. The bank’s tagline, ‘truly agric and more’, underscores its commitment to agribusiness financing for wealth creation. The bank also aspires to contribute to a cash-lite system through projects like the Ghanapay Gateway and paperless deposit initiatives.

To reinforce its position in agribusiness financing and overall economic development, ADB continues to forge partnerships with risk-sharing entities, notably the Ghana Incentive-Based Risk Sharing System for Agricultural Lending (GIRSAL). The bank was recently honoured with the 2022 Highest Value of Guaranteed Agricultural Credit Award by GIRSAL. With an agricultural sector loan portfolio surpassing GH¢1billion, ADB remains dedicated to its foundational mandate.

Embracing sustainable banking principles, the bank is integrating environmental, social, and governance factors into its operations. ADB aims to raise awareness through various programmes, aligning growth with responsible practices for sustainable returns.

Despite the optimism emanating from ADB’s strategic direction, the bank reported a loss of GH¢371million in 2022 – thus deviating from its trend of modest profitability. This decline was influenced by broader challenges within the Ghanaian economy. The Ghana cedi’s sharp depreciation, coupled with elevated inflation, significantly impacted the bank’s financial performance. Implementation of the Domestic Debt Exchange Programme (DDEP) further strained ADB’s financial standing and outlook.

The broader banking industry also encountered a tumultuous 2022. Across most banks, losses led to an industry-wide deficit of about GH¢8billion; a stark contrast to the GH¢7.4billion profit in 2021. This slump caused negative profitability indicators and a decline in Capital Adequacy Ratios (CARs), although the majority remained above the regulatory minimum. Nonetheless, total industry assets saw an 18.3 percent growth, reaching GH¢212billion by the end of 2022. Deposits spiked by 30.5 percent compared to the previous year, while total credit increased by 26 percent.

The operating and economic environment in Ghana during 2022 posed a blend of opportunities and challenges. Macroeconomic instability, global financial tensions and external geopolitical events like the Russia-Ukraine conflict all contributed to a drop in real GDP growth to 3.3 percent. Inflation surged to 31.5 percent, driven by food/energy prices, and currency depreciation. Despite these difficulties, ADB remains committed to fostering economic growth through agribusiness financing and sustainable practices.

As ADB embarks on its new strategic plan in a dynamic economic landscape, its resolve to adapt, innovate and contribute to Ghana’s financial stability remains stronger than ever.

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