GCB Bank shows impressive growth
- By: B&FT Online
- May 26, 2015
- 3 min read
GCB Bank has released some very convincing financial results despite the economic challenges facing the country, critical among them the energy crisis that is crippling businesses.
All aspects of the bank from total assets, loans and advances to customers, deposits from customers, shareholder equity, profit before and after tax, dividend per share, interest income, and fees and commission income have seen growth, projecting a positive outlook for the short-, medium- and long-term of the bank.
Since the bank’s restructuring agenda started with the appointment of Managing Director Simon Dorno five years ago, and an aggressive rebranding process that began last year, GCB Bank has posted impressive results consecutively for the past five years.
GCB Bank has seen its profits grow by more than 20 times in the past five years, from GH¢18million to GH¢395million with the total valuation of the bank increasing seven-fold from GH¢196million to GH¢1.4billion as at the end of 2014. The amount of dividend paid has increased from GH¢4.5million five years ago to GH¢ GH¢84.8million today.
Mr. Dornoo told shareholders at the 21st annual general meeting of bank that despite these great results, the bank continues to focus on long-term value creation without sacrificing short-term profitability.
According to him, the bank will continue to maintain a disciplined approach to its evaluation of trade-offs and make choices that sustain the business in an increasingly competitive market. “The bank continued to make steady progress toward its goals by reporting another set of strong results under challenging trading conditions,” he said.
The bank’s profit before tax went up by 25 percent from GH¢317million in 2013 to GH¢395million last year, while total income increased by 29 percent to GH¢731million during the same period.
Operating cost went up by 58 percent to GH¢428million, which according to Mr. Dornoo is a reflection of the higher investment cost of business reorganisation to achieve the transformation plan; payment against judgement debt, which is being appealed; sharp increase in utilities and many others. There was also a one-off cost amounting to GH¢95million.
Cost efficiency ratio therefore increased to 59 percent in 2014 compared to 48 percent in 2013. Credit impairment charges increased to GH¢24million due to asset growth and the difficult operating environment; however, according to the MD the overall cost of risk remains relatively stable following strong recoveries made during the year.
The bank delivered a return on equity of 41 percent, a drop from 2013’s figure of 49 percent; meanwhile, return on assets remained flat at 7 percent from 2013.
Total assets increased by 25 percent to GH¢4.3billion, driven by growth in loans and advances and investment in securities. Loans and advances to customers increased by 29 percent to GH¢1.2billion with strong contribution from consumer banking throughout the year, while corporate banking showed strong growth in the last quarter of the year.
Customer deposit increased by 17 percent to GH¢3.1billion, reflecting successful deposit mobilisation campaigns. Total shareholders’ equity was up 48 percent to GH¢689.4million in 2014 from GH¢466.1million in 2013.
Mr. Dornoo noted that despite the range of uncertainties and challenges with the macroeconomic prospects for 2015, conclusion of the agreement with the IMF on economic policy choices to bring the economy back on track over the next few years of the programme should restore some measure of confidence in the markets.
New board chairman, Daniel Owiredu, stated that the bank’s basic and diluted earnings per share increased by 23.3 percent from 86pesewas in 2013 to GH¢1.06.
With capital adequacy ratio standing at 23 percent at the end of 2014 from 18 percent in 2013, the bank’s board is paying a cash dividend per share of 32pesewas for 2014, representing an increment of 28 percent on 2013’s amount of 25pesewas.
Mr. Owiredu, with more than 30 years experience in the mining sector, noted that despite the challenging outlook of the economy the bank will continue its commitment to the transformational changes needed for it to attain a sustainable competitive position.
“We will continue to invest in the bank’s risk infrastructure to ensure it is able to sustain the improving trend in its ratings, which is important for enhanced access to money and capital markets. This is the niche that is ours by tradition and national responsibility.”
Source: Thebftonline.com
