Shareholders of the Agricultural Development Bank (ADB) PLC have granted approval for a record capital injection of GH¢2billion into the bank to strengthen its operations.
The resolution was passed at an Extraordinary General Meeting (EGM) of shareholders on Thursday, December 28, 2023 at the Accra Financial Centre. The resolution was in furtherance of the bank’s intention of raising additional capital to shore up its minimum paid-up capital; which has been adversely affected by factors including impacts from the recent Domestic Debt Exchange Programme (DDEP) and the banking sector’s challenged performance over the past two years, among others.
The resolution received an overwhelming endorsement, without any opposition or abstention. The approval has now empowered the bank to raise additional equity capital of up to GH¢2billion through a renounceable rights issue on such terms (including the share price, the number of offer shares, allotment and other modalities).
Need for Additional Capital
Speaking at the EGM, the bank’s Board Chairman – Daasebre Akuamoah Agyapong II, indicated that per Section 28(1) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), ADB is required to maintain the prescribed minimum paid-up capital (unimpaired by losses including accumulating losses or other adjustments).
“The current minimum paid-up capital prescribed by the Bank of Ghana for banks, including ADB, is GH¢400million,” he added.
However, Daasebre Akuamoah Agyapong II noted that the recent adverse economic events (including the DDEP and impairments in the bank’s loan book) unfavourably impacted the bank’s minimum paid-up capital.
This, the Board Chairman said, birthed the bank’s intention of raising additional capital to shore up its minimum paid-up capital.
Daasebre Akuamoah Agyapong II highlighted the crucial role this capital infusion will play in advancing the bank’s mandate of promoting socio-economic development through agriculture and more.
Liquidity
The bank’s third-quarter results showed growth in Net Interest Income and Operating Income of GH¢397million and GH¢621million respectively.
Although the Bank reported a decline in net profit at the end of Q3 2023 – largely due to phase II of the DDEP and impairments, deposits from customers increased significantly to GH¢7.7billion from GH¢¢5.2billion in 2022 Q3.
The bank’s total assets also grew significantly – from GH¢7.1billion in Q3 2022, to GH¢9.3billion in Q3 2023, indicating a substantial asset increase or growth of GH¢2.2billion.
ADB’s liabilities also saw significant growth to GH¢8.6billion in Q3 2023, compared to GH¢6.1billion in Q3 2022.
Outlook of the Bank, following the Capital Injection
The bank’s shareholders overwhelmingly voted in favour of all resolutions tabled at the EGM, indicating their enthusiastic willingness to recapitalise the bank to enable it continue playing its strategic role in Ghana’s agricultural development.
In his remarks following the EGM, Alhaji Alhassan Yakubu-Tali – Managing Director of the bank, expressed gratitude for the resounding vote of confidence from shareholders, adding that the additional capital will significantly enhance the overall operations of ADB.
“The additional capital injection will provide solidity and more comfort to our customers, investors and the general public. For this gesture, I want to say a big ‘thank you’ to our shareholders for the significant milestone chalked up,” he said.
Alhaji Alhassan Yakubu-Tali added that the injection of additional capital will not only fortify the bank’s financial strength, but also position it strategically to extend continuous support to the agricultural sector and other critical areas of operation.
Other resolutions, including approval of appointing a new external auditor for ADB, were also overwhelmingly passed in line with due process.
Agricultural Development Bank PLC is listed on the Ghana Stock Exchange, with the majority of its shares being owned by government. The bank also has a sizeable proportion of private, institutional and retail shareholders.
