Last year, Ghana Commercial Bank spent more on its board members than it spent on marketing and advertising, and even on the training of its staff. GCB spent a whopping GH¢1.26million on directors’ emoluments, which is equivalent to US$ 842,000 and represents an increase of 71 percent over the previous year’s figure.
Expenditure on advertising and marketing was GH¢1.069 million while training cost was GH¢673,178. The bank’s board has 12 members including its Managing Director, Mr. Simon Dornoo, and two deputies, namely Mr. Samuel Amankwah and Mr. Samuel Sarpong who are executive directors, while the remaining are non-executive directors.
The board chairman is Mr. Pryce Kojo Thompson, a retired banker, and the rest of the members are Mrs. Adelaide Mary Benneh, Dr. Fritz Augustine Gockel, Mr. Elliot Gordor, Mr. Fifi Kwetey, Ms. Lauretta Vivian Lamptey, Mrs. Charlotte Osei, Mr. Joshua Peprah and Mr. Lovelace Prempeh.
Even though GCB is one of the biggest banks in the country and its two other main competitors, which are Standard Chartered Bank Ghana and Barclays Bank Ghana, have eight members each on their respective boards, ironically they are multinationals while GCB is an indigenous bank. On the average, each director received GH¢105,331 which is equivalent to US$70,000.
At the bank’s annual general meeting last week, a shareholder raised a query about expenditure on directors’ emoluments, wanting to know the basis for the figure reported in the financial statement. The issue of agency problems conspicuously comes to the fore. The question therefore is whether the directors are acting in the interest of shareholders or in their own interest.
GCB declared profit before tax of GH¢91.3million, up 343 percent from the GH¢20.6million recorded the previous year. Mr. Simon Dornoo explained: “This was mainly driven by a strong growth in net interest income arising from a combination of strong deposit growth, improved margin management, and progress made on improving the quality of some loan assets that enabled us to write-back suspended income.”
Customers’ deposits increased by GH¢316million, or 25%, to GH¢1,575million. This was driven by strong growth in deposits across the Retail, SME and Corporate segments. “We are beginning to take in the benefits of investments in cash management solutions, which are making it easier and convenient for our customers to bank with us.”
Total assets increased by GH¢190million, or 10 percent, to GH¢2,113million in 2010. Loans and advances to customers decreased by GH¢262.9 million, or 21%, to GH¢1,003million as a result of steps taken to rebalance the loan book by reducing over-exposure to the oil sector while seeking to expand business in Retail, SME and private corporate segments.
Touching on the ratios of the bank’s performance, a confident Managing Director said the Bank’s cost to income ratio fell sharply to an unprecedented level of 51% (2009:70%), which makes it comparable to the best in the peer-group. GCB’s 2010 results translate to a Return on Equity (ROE) of 25% and Return on Assets (ROA) of 2.8%.
