- records growth in all indicators, despite effects of locked up funds and DDEP
Bosomtwe Rural Bank Limited at Kuntanase in the Bosomtwe District of Ashanti Region has recorded an impressive growth in all financial indicators in the 2022 year under review.
The Bank recorded profit before tax of approximately GH¢2.5 million in the 2022 year under review as against approximately GH¢2million in the previous year representing a satisfactory growth of 19.4% with deposits increasing by 23.94% from about GH¢122million in 2021 to a little over GH¢ 151million in 2022.
The impressive growth in deposit of the year under review represents the confidence the general public and customers have in the Bank as well as the hardworking staff in deposit mobilization and inculcating effective culture of saving(s) in the people within the Bank’s operational territories.
The Bank’s stated capital grew from approximately GH¢3.9million as at 31st December, 2021 to a little over GH¢3.92million in December 2022, representing a marginal growth of 0.65% which far exceeds the minimum threshold of GH¢1million by over 250% required by all rural banks in Ghana.
In view of the marginal growth of the Bank’s share capital coupled with the Board’s resolution to impair some locked-up funds which will consequently have a negative effect on the capital adequacy of the bank, there was a proposition to pass a resolution for a “Rights Issue”.
The objective of this resolution was to at least boosts the Bank’s share capital up by thirty percent (30%).
Operational Environment
The Chairman of the Board of Directors, Fred Asafu – Adjaye announced these and more at the Bank’s 33rd Annual General Meeting of shareholders held last Tuesday at Kuntanase in Ashanti.
In his address he mentioned that the financial performance of the banking industry improved significantly in the year 2022, exactly four years after the completion of the sector reform and two years after the emergence of the novel coronavirus pandemic.
Inflation rate as at the close of business, 31st December, 2022 was 31.26% as against 9.97% in the year 2021 with Government of Ghana Treasury Bill rate of 35.90% in 2022 as against 16.56% in 2021.
The year-on-year inflation rate for March 2022 was 19.40% which was higher than the 9.97% recorded in the fourth quarter 2021.This showed relatively low stability in the two quarters’ inflation between the fourth (4th) quarter 2021 and first (1st) quarter 2022.
The Ghanaian cedi weakened against the major trading partners like US dollar, Euro and Pound Sterling on the international market; the dollar being the major partner depreciated by thirty percent (30%) against the former, in the period under review.
Operational Performance
In spite of the unstable macroeconomic environment in which the bank operated during the reviewed year, the bank managed to pull yet another impressive operational performance in all the financial indicators as shown in the table.
| ITEM | YEAR 2021
GHS |
YEAR 2022
GHS |
PERCENTAGE
CHANGE % |
| DEPOSITS | 121,982,683 | 151,183,960 | 23.94% |
| LOANS | 31,526,434 | 32,910,085 | 4.38 |
| INVESTMENT | 76,027,801 | 105,368,710 | 38.59 |
| TOTAL ASSETS | 136,715,498 | ||
| STATED CAPITAL | 3,909,545 | 3,923,225 | 0.35 |
| PROFIT BEFORE TAXATION | 2,093,043 | 2,499,113 | 19.4 |
Dividend
The Board per a regulatory directive could not recommend payment of dividend because of the unfavourable conditions of the macroeconomic environment. The issue of dividend payment has engaged the Board and Management’s attention since the previous year.
The Board Chairman reiterated that he and his colleagues on the Board perfectly understand the grave concern being expressed by Shareholders and really share their plight. However, the Bank has been slapped with locked up funds which has a ripple effect on its financial indicators, coupled with the strict directives of the Regulator and failure to comply therewith shall result in serious consequences.
Bosomtwe Rural Bank has over the years invested in GoG bonds, Treasury bills and Fixed Deposits with other Discount Houses. However, the Bank is finding it difficult to unlock funds placed with these Institutions.
Meanwhile the Board and Management are sparing no effort in recovering the above-mentioned locked up funds. In view of this the Board was unable to recommend the payment of Dividend for the year under review.
Corporate Social Responsibilities
The Bank continues to offer assistance to communities and institutions within its catchment areas in terms of community development projects. In the year under review the bank spent an amount of GH¢65,000 on corporate social responsibility activities towards the stakeholders with special focus on Farmers’ Day donation to four municipal and two district assemblies in the Bank’s catchment areas.
Future Outlook
The CEO of the Bank, Francis Agyei Bekoe in an interview with Business & Financial Times said Management would continue to seek ways of strengthening and developing the Banks’ operations to maintain the confidence that customers and shareholders have in the Bank.
The Bank’s business model according to the CEO is still tailored for the Micro Small and Medium Enterprises and would push for more market penetration as they develop new and innovative products and trusted relationships with clients of the bank.
