…records strong growth despite impact of DDEP
The ARB) Apex Bank PLC has posted impressive financial growth in almost all the financial indicators in the 2023 year under review, in spite of the cascading effect of the Domestic Debt Exchange Programme (DDEP)
The bank has recorded an impressive growth in Profit Before Tax, surging from GH¢ 164.0 million to GH¢ 364.8 million, representing of 122.4 percent.
The bank attained an asset growth rate of 30.1 percent year-on-year growth from GH¢ 8.4 billion to GH¢11.0 billion in the year under review.
However, the DDEP and locked up funds of some RCBs with the security and Exchanges Commission regulated institutions undermined the aforementioned strides, as investments of the Bank, which was reduced by the effects of the DDEP, recorded an increase of 17.9 percent from GH¢432.4 million in 2022 to GH¢510.1 million in the 2023 year under review.
The cascading effect of the DDEP on the bank continued unabated in the year under review, as the impairment fund which were originally earmarked for dividends were used for DDEP.
The bank’s impairment fund used for the DDEP exercise went up from GH¢113.0 million in 2022 to an amount of GH¢134,369,366 as at end of 2023.
The Bank’s capital shot up from GH¢ 9.3 million to GH¢13.4 million, recording 44.9 percent in the year under review.
The Chairman of the Board of Directors, Dr Toni Aubynn announced these and more at the Bank’s 22nd Annual General Meeting held LAST Saturday at Golden Bean Hotel in Kumasi.
According to him, the Global economic activities softened in year 2023, with headline inflation staying on a downward route, supported by lower energy and food prices as well as tight monetary policies.
Global financial conditions remained tight with restrictive monetary policies transmitting strongly into broader financing conditions, while external borrowing costs in Emerging Markets and Developing Economies (EMDEs) remained high.
The national economy was not left out of the woods from the impact of the happenings in the global economy. Though, Ghana witnessed some improvements in its economic conditions throughout year 2023, persistent challenges remain, notably characterized by elevated inflation, subdued growth, and substantial pressure on public finances and debt sustainability.
These vulnerabilities resulted in restricted access to international markets, limited domestic financing options and rising reliance on monetary measures to support government expenditures. The Government of Ghana’s invitation for a voluntary exchange of domestic notes and bonds of the Republic for a package of new bonds as part of its public debt restructuring, which was launched in late 2022, materialized in the first quarter of year 2023.
The initial GH¢137.3 billion worth of bonds was eventually revised to GH¢109.84 billion, with the government realizing an actual exchange of GH¢87 billion. The exercise was, however, met with stiff resistance and negative reaction from investors who were left disappointed.
The banking sector recorded overall significant improvement as the adverse effects from the Domestic Debt Exchange Programme (DDEP) and macroeconomic challenges started easing. The sector remained stable, liquid and profitable. It recorded a staggering growth of 224.6 percent in profitability from the GH¢ 6.6 billion the industry lost in the previous year to GH¢8.3 billion profit in 2023.
This was mainly driven by exceptionally high yields on money market instruments since the debt exchange was launched and the increase in lending rates. Net interest income contributed a high growth rate of 41.5 percent compared to 18.7 percent in 2022.
The rural banking sub-sector followed the growth trajectory of the major banking industry. The sub-sector recorded growth of 122.4 percent in Profit Before Tax from GH¢164.0 million in December 2022 to GH¢364.8 million in December 2023.
Growth in total assets was 30.1 percent year-on-year from GH¢8.4 billion at the end of December 2022 to GH¢ 11.0 billion as at December 2023. Deposits also rose by 31.1 percent from GH¢7.4 billion in December 2022 to GH¢9.7 billion, with corresponding growth in loans and advances by 26.9 percent from GH¢2.6 billion to GH¢ 3.3 billion.
CAR saw a marginal increase from 10.7 percent to 12.54 percent while NPL declined from 11.2 percent in 2022 to 9.9 percent, indicating an improvement over the previous period.
The ARB Apex Bank successfully secured a five year on-lending facility agreement of USD4.00 million with the Ministry of Finance and Social Investment Fund (SIF), under the Post Covid-19 Development and Productivity Enhancement Project (PSDPEP), for disbursement through RCBs and other institutions.
It continued to assist fifteen (15) RCBs to procure and retrofit their bullet proof Bullion Vans in compliance with regulatory requirements.
Much as it gave credence to improvements regarding some RCBs investing funds with other financial institutions, as well as borrowing funds and pledging deposits as collateral, the situation persisted.
It recorded a total staff strength of the bank stood at 159 employees, up from the 156 at the 21st AGM. The bank has rolled out implementation of the Ghana Financial Sector Development Project (GFSDP) under the Ministry of Finance.
It has upgraded its Data Centre Infrastructure with an amount of US$8.00 million to deepen financial inclusion.
The influx of Financial Technology (Fintech) firms and the termination of inward remittances into bank accounts and mobile wallets have become a major challenge for inward remittances at our branch locations.
The Board Chairman, Dr Aubynn revealed that the approval of the Bank’s strategy to raise additional capital of GH¢25.0 million over five years with GH¢ 5.0 million annually is yielding positive results.
The Bank’s capital grew by 44.9 percent from GH¢9.3 million as at December 2022 to GH¢ 13.4 million as at December 2023. With the current growth and performance trajectory, the board anticipates that the Bank will, in the near future, be in a position to declare and make payment of dividend to Shareholders as it works prudently to get out of the lingering effects of the DDEP.
