GCB Bank halts capital raise amid strong financial performance

GCB Bank, a leading financial institution, has announced the suspension of its planned capital raising initiative.

This decision, announced at the 30th Annual General Meeting (AGM), comes on the heels of the bank’s strong financial results for year 2023 and a positive outlook for 2024.

The bank had initially received approval from shareholders at its last annual general meeting (AGM) to raise up to GH¢1billion in equity capital. Subsequently, the bank settled on a capital size of GH¢550million and secured approval from both the Securities and Exchange Commission (SEC) and Ghana Stock Exchange (GSE).

However, recent financial scenario analyses based on the bank’s 2023 performance, first quarter 2024 results and current market conditions have led the Board to reconsider this move.

The bank’s Managing Director, Kofi Adomakoh, explained the decision in an interview following the AGM, saying: “We can do the programmes, the initiatives and all the CAPEX that we need to do with what we have.

“GCB has quite a number of things up its sleeve, and they may require capital to do some of those things. As a result, we are saying let’s slow down on the capital needs,” he added.

The bank’s financial results for 2023 have been particularly impressive. Total revenue grew by 26 percent to GH¢3.78billion, supported by a 37 percent growth in net interest income. The bank’s profit before tax reached a historic milestone of GH¢1.55billion, marking a significant turnaround from a loss position of GH¢743.5million in 2022.

Mr. Adomakoh emphasied the importance of adapting to the current economic climate: “Let’s see how 2024 pans out. And depending on how 2024 pans out, the global economy, the national economy itself a and the banking industry in Ghana, we’ll make a decision”.

The bank’s capital adequacy ratio, a key indicator of financial health, has shown substantial improvement. As of March 2024 it stood at 19.1 percent, up from 17.9 percent at the end of December 2023. This improvement, coupled with the bank’s strong financial performance, has given the Board confidence in its ability to pursue strategic initiatives without immediate additional capital.

“The importance of maintaining healthy capital ratios is a key differentiator enabling us to support client transactions and make relevant capital investments to achieve sustainable returns for our shareholders,” Adomakoh noted.

He added: “The economic recovery combined with implementing profit growth strategies has contributed to rebuilding our capital levels post-DDEP (Domestic Debt Exchange Programme).”

The DDEP, which resulted in significant impairment losses on government securities in 2022, had initially prompted the need for capital raising. However, the bank’s robust recovery and improved financial metrics have alleviated this immediate need.

GCB bank’s balance sheet remains strong, with total assets of GH¢27.2billion, indicating a growth of 26 percent compared to 2022. Customer deposits reached GH¢21.8billion – up 23 percent, driven by improved product offerings and increased customer confidence in the GCB brand.

Mr. Adomakoh further emphasised the bank’s commitment to prudent financial management: “If we can work with little and gain more, it’s all about doing more with little. And that’s what we are trying to do”.

While the capital raise is on hold for now, the bank’s management has assured shareholders that they will continue to assess the situation and ensure the bank’s capital level remains sufficient to support its business objectives and drive long-term success.