Banks fleece customers; records 66.5% profit in first quarter

The 28 universal banks operating in the country have recorded big leap in terms of profit for the first quarter 2013. The banking sector’s profit before tax grew in year-on-year terms, by 66.5 percent in April 2013 compared with 47.5 percent growth in April 2012. Similarly, the industry’s net profit after tax saw a growth of 61.3 percent in April 2013 compared with 55.5 percent growth in April 2012, according to figures from Bank of Ghana.

Commission and fees (net) growth improved from 23.9 percent in April 2012 to 30.1 percent in April 2013 while other income declined by 14 percent.


Interest expenses of the banking industry increased, in year-on-year terms, by 90 percent in April 2013 compared with a decline of 6.6 percent in April 2012.


The ratio of gross income to total assets (i.e. assets utilisation) improved to 5.9 percent in April 2013 from 5.1 percent April 2012. Interest spread, however, widened over the period from 3.3 percent in April 2012 to 3.8 percent at the end of April 2013.


The banking industry’s return on assets (ROA) increased to 36.3 percent as at end April 2013 from 30.4 percent by end April 2012. Similarly, return on equity (ROE) increased to 4.1 percent in April 2013 from 3.2 percent in April 2012.


Interest income from loans which continued to be the main source of income for the banking industry constituted 49.7 percent of total income in April 2013 compared with 45.7 percent in April 2012. Investment income share of 26.1 percent of total income was an improvement over the 21.5 percent recorded in April 2012. The share of commission and fees in total income declined from 18.1 percent in April 2012 to 15.8 percent in April 2013.

Data on the banking industry for the period ended April 2013 indicated that the industry’s balance sheet expanded by 27.4 percent to GH¢29.6 billion. The increase in total assets reflected mainly in domestic assets. Domestic assets increased by 31 percent by the end of April 2013, compared with the 19.7 percent growth registered in the same period in 2012. Foreign assets, however, declined by 3.5 percent in April 2013 compared with 31.6 percent growth for the same period in 2012.


Gross loans and advances of GH¢13.93 billion as at April 2013 showed a growth of 34.7 percent compared with 41.5 percent growth in the same period of 2012. Net loans and advances amounted to GH¢12.57 billion, representing a year-on-year growth of 35.4 percent in April 2013 compared with a growth rate of 45.6 percent recorded in April 2012.


Banks’ investment portfolio (bills and securities) grew in year-on-year terms, by 27.2 percent to reach GH¢8.08 billion by the end of April 2013 compared with a growth of 3.8 percent as at the end of April 2012.


The pace of growth of deposits liabilities slowed down in the first four months of 2013, broadly in line with general economic conditions. Deposit liabilities, which remained the main source of banks’ funding, grew by 22.4 percent to GH¢ 13.09 billion in April 2013 compared with 29 percent growth registered in April 2012. Total borrowings grew in year-on-year terms, by 34.7 percent to GH¢2.68 billion in April 2013 compared with a 4.7 percent decline in April 2012.


Banks’ Paid –up capital also grew by 29 percent to GH ¢2.17 billion by the end of April 2013, compared with the 13.9 percent growth in April 2012.

The banks’ balance sheet structure as of April 2013 showed that investments’ (in both bills and securities) share in total assets remained unchanged at 27.3 percent between April 2012 and April 2013. However, the share of net loans and advances in banks’ assets of 42.4 percent in April 2013 was higher than 39.9 percent recorded in April 2012.


Total deposits constituted 69.9 percent of the industry total liabilities at the end of April 2013 compared with 72.7 percent recorded in April 2012. The proportion of shareholders’ funds in total liabilities, however, increased marginally to 15 percent in April 2013 from 13.5 percent April 2012.


This implies that 15 percent of the banking sector assets were backed by equity. Also, the share of total borrowings in total liabilities increased to 9.1 percent as at April 2013 from 8.6 percent registered in April 2012.


Banks’ investment in securities (long term investments) as a share of total investment increased to 49.2 percent in April 2013, from 34.8 percent in April 2012. Investment in treasury bills (short term investments) as a share of total investment consequently decreased to 48.9 percent in April 2013, from 63.3 percent in April 2012.


Real gross loans and advances of the banking industry grew in year-on-year terms, by 21.7 percent at the end of April 2013 compared with 29.7 percent growth recorded in the same period in 2012.

Credit to the private sector also grew by 19.1 percent as at the end of April 2013 compared to the 25.9 percent growth at the end of April 2012. Credit to the households also witnessed a real growth of 29.7 percent in April 2013 compared with 28.7 percent real growth recorded in the same period in 2012.


The composition of banks’ credit portfolio by economic institutions showed that public enterprises accounted for 5 percent of gross loans and advances as at April 2013, compared with 4.4 percent recorded in April 2012. Loans to private enterprises, accounted for 70.5 percent of gross loans in April 2013, down from 74.4 percent recorded in April 2012. The share of household loans in gross loans, however, increased to 16.7 percent in April 2013 compared with 15.7 percent in April 2012.


Credit to government and public institutions constituted 7.8 percent of gross loans and advances in April 2013, up from 5.5 percent registered in April 2012.