GCB on profit path

Mr. Simon Dornu, the Managing Director of Ghana Commercial Bank (GCB), says GCB will soon become the best-performing bank.

“You will notice from our Q1 results that we are on track with achieving our objective of becoming the best-performing bank in Ghana, and that is happening quicker than many would have expected.”

He said the strategy for the Bank is to pursue profitable growth opportunities.

GCB’s net profit for the three months to March rose 18 percent to GH¢23.384million (US$12.43million) from GH¢19.764 million a year ago.

Its net interest income for the first quarter rose to GH¢58.373million from GH¢54.273million, representing 7.5 percent growth.

Its cash-income ratio stood at 57.4 percent. But he said he wants GCB to achieve a cash-income ratio of 55 percent.

Basic Earnings per Share were up to GH¢ 0.35 from GH¢0.30 for the same period in 2011 However, its net profit for the twelve months to December 2011 fell nearly 65 percent to GH¢17.972million from a restated GH¢50.880million in 2010, while net interest income slid nearly 28 percent to GH¢206.812million in the same period.

“The decline in interest income was anticipated and the direct result of restructuring the Tema Oil Refinery into a lower yielding investment instrument. The markets have turned around and you will observe a significant upswing in interest income for Q1.

“GCB’s profit for 2011 declined due to a combination of lower interest income and higher costs. The full impact was offset by a significant decline in loan impairments. I would like to note that these are headline results and that the underlying performance is very strong, as borne out by our Q1 results.”

He said before government took over TOR’s debt, the Bank was earning about 25 percent on the loan -- but half of it had to be converted into a bond with a yield of about 11 percent.

GCB’s interest expense also shot up from GH¢192million in 2010 to GH¢251million in 2011. He explained that expenses include significant one-off costs associated with the transformation of the Bank. These are staff restructuring cost, and write-down of balances held in the Bank’s books to their recoverable amounts.

It is instructive to note that the Bank restated its accounts for last year. He said: “The previous year’s accounts were restated to take care of additional provisions for non-credit related impairments that were identified following an exercise to review the recoverability of balances in the bank’s books, and to improve compliance with International Financial Reporting Services (IFRS). Some of these adjustments relate to prior years, hence the restatement.”

On the question of why it took the bank so long to publish the 2011 results, he explained: “It was necessary to seek an extension to enable us to complete a deep-dive exercise to clean up the bank’s books and improve compliance with IFRS. Work has progressed smoothly and the figures reported reflect the impact of this exercise.”

The bank said it will be proposing the payment of a final dividend of GH¢0.07 per share for the 2011 financial year.