Bonzali Rural Bank's profit drops

Kumbungu (N/R), Aug 5, GNA - Profit before tax of Bonzali Rural Bank in the Tolon/Kumbungu District dropped from 1,318,333,347 cedis in 2005 to 891,724,407 cedis in 2006, representing a 32 per cent drop. The shareholders' Fund, however, increased from 4,585,377,856 cedis in 2005 to 5,365,549,827 cedis in 2006, an increase of about 17 per cent.

Alhaji Mahdi Abdulai, Chairman of the bank's Board of Directors, said this in his report at the fifth Annual General Meeting of the Bonzali Rural Bank at Kumbungu on Saturday.

Alhaji Abdulai attributed the decline to the break down of the bank's internal control system, saying: "There was a lot of irregularities and the Board had to contract an external auditing firm to clean the books thereby increasing office expenses". Additionally, he said: "All the executive management members were employed in 2006, bringing the staff strength from 38 in 2005 to 49 during the year under review thus increasing salaries and allowances". The Board Chairman told the meeting that the Board did not recommend the payment of dividend this year since it had an ambitious strategy to substantially increase the shareholder value in the shortest possible time.

"The strategy would require the commitment of a lot of funds. In the meantime, the Board is in the process of allocating 481,000,000 cedis as bonus to shareholders."

Alhaji Abdulai said bonus shares were a requirement of the Bank of Ghana to increase the stated capital of the bank to 500,000,000 cedis.

Alhaji Abdulai said the year under review was one of great changes and achievements.

The bank decided to open two new agencies at Lamashegu in the Tamale Metropolis and Nyankpala in the Tolon/Kumbungu District. It introduced three new products; "Walma Savings Scheme, Hajj Savings Scheme (for prospective pilgrims) and the Fixed Deposit Receipt. He said while the Walma scheme was doing well, bagging a little over one billion cedis within nine months (from October 2006 to June 2007), the other two schemes were yet to pick up.

The Board Chairman announced that the chief of Kumbungu had offered the bank land to build its head office in the town.

He said the Board had therefore resolved that 20 per cent of profit bank would declare every month should be set aside as "Head Office building fund".

Alhaji Abdulai said with strategies the Board had adopted there was every indication that the bank would have a promising 2007. He said the commissioning of the two new agencies and the effective and efficient marketing of the bank's three new products would be given prime attention to boost income generation and thus higher shareholders value.

In an address read on his behalf Mr Emmanuel Kwapong, Managing Director of ARB Apex Bank, said since its establishment, the banking institution had provided banking and non-banking support to the rural banks to enable them to contribute significantly to the socio-economic development of their catchments.

He said Apex Bank had also developed "Home Cash" and "Apexlink Domestic Funds Transfer" financial products to enhance deposit mobilisation and profitability of rural banks.

He therefore urged the public to use these products and not to carry money in their luggage when travelling. Mr Kwapong said one of the key challenges facing rural banking was how to ensure good governance.

The President of North Eastern Chapter (Northern and Upper East Regions) of The Association of Rural Banks, Mr John Asibigi, urged the shareholders to increase their shareholdings in the bank and patronise its products.

He said the association had plans to build data banks for all the rural banks in its catchments to enhance their operations. Alhaji Mustapha Ali Idris, Northern Regional Minister, commended the Bonzali Rural Bank for its support towards empowering the rural and urban communities to engage in small and medium-scale businesses to help alleviate poverty in the region.

The Minister, in a speech read for him, appealed to the management of the bank "to take advantage of the enabling environment provided by the government" to develop more products to benefit the people. A number of persons who had played pioneering roles in the establishment and development of the Bonzali Rural Bank received awards including undisclosed cash prizes. 05 Aug 07