Dip in Q1-2017 profits to impact GCB share performance

GCB Bank recorded a 31.06% dip in pre-tax profits in the first quarter of 2017 [Q1-2017]. Profit before Tax fell from GHS 126,862,000 in Q1-2016 to GHS 87,464,000 in Q1-2017.

The significant fall in pre-tax profits can largely be attributed to the growth in impairment losses on loans and advances. Impairment loss on loans and advances increased by 2,386% in Q1-2016 to GHS 10,392,000 from the Q1-2016 figure of GHS 418,000.

Net Interest Income however grew by 11.95% to GHS 220,717,000 in Q1-2017 compared to same period prior year where the bank recorded Net Interest Income figure of GHS 197,157,000.

Net Fees and Commissions Income grew marginally by 0.29% in Q1-2017, whilst Net trading Income for Q1-2017 fell by 9.06% to GHS 8,804,000. Earnings per share fell from GHS 1.48 in Q1-2016 to GHS 0.95 in Q1-2017.

Operating Income of the bank increased marginally by 9.1% to GHS 269,884,000 compared to GHS 247,418,000 reported in Q1-2016. Personnel expenses also went up in Q1-2017 by 18.70%; rising to GHS 82,606,000 from GHS 69,593,000 in Q1-2016.

The size of the loan book of the bank shrunk by 3.62% in Q1-2017 compared to Q1-2016. Total loans and advances stood at GHS 1,426,377,000 in Q1-2017 compared to GHS 1,479,949,000 in Q1-2016.

Total Assets increased by 17.77% to GHS 5,947,785,000 in Q1-2017. Non Performing Loans [NPL] Ratio decreased from 14% in Q1-2016 to 12% in Q1-2017. Capital Adequacy Ratio [CAR] of the bank was at 30% at the end of Q1-2017 significantly above the statutory requirement of 10% by the banking regulatory body.

GN Analysts expect that the dip in profits of the bank will minimally impact the share price of GCB. A short term dip in the share performance is however anticipated. GN Analysts expect the share price to bounce back in the short term. GCB shares are a HOLD.

Trading activity on the bourse ended with 3 gainers [CAL, HFC and SCB] yesterday. HFC topped the trading chart in terms of volume as 32,400 shares worth GHS 16,848.00 changed hands. Returns on the Composite and Financial Stock Index pegged at 12.10% and 15.97% respectively.

On the Ghana Alternative Market [GAX]-

Trading activity on the Alternative market was hushed as no shares changed hands.

HORDS currently lead record capital gains on the GAX, appreciating by 25% from 2016 year open.

On the Currency market –

The Cedi GAINED marginally to the British Pound and Euro but LOST to the Dollar on the inter-bank market yesterday.

The local currency exchanged at a mid-rate of GHS 4.1955 to the USD, GHS 5.4269 to the GBP and GHS 4.5839 to the EURO.

The GCFM Cedi index, a measure of the holistic performance of the Cedi on the inter-bank market now records a year-to-date depreciation of 1.70%.