GCB profit down 10%, assets up 9%

One of Ghana’s largest banks by total assets, GCB Bank recorded mixed results in the 2015 financial year.

The bank recorded a profit after tax of GHC254.64 million in 2015, representing a 9.75% decrease as compared to the GHC282.15 million recorded in 2014.

This was announced by GCB Bank’s Chairman, Mr Daniel Owiredu, at the bank’s Annual General Meeting (AGM) in Accra.

The fall in the bank’s profit comes on the back of a spike in impairment charge on loans and advances of GHC93.5 million for the year under review, from GHC23.8 million in 2014.

“An industry-wide credit deterioration in the year under review affected GCB Bank, necessitating an increase in a charge for loan loss of GHC93 million compared to GHC24 million in 2014,” Mr Owiredu disclosed, adding: “This led to a profit after tax of GHC255 million, 10% lower than was achieved in 2014.”

According to the bank, the increase in the impairment for the year was on “account of a GHC65 million impairment charge for a customer who had an expired overdraft of GHC30 million and a seed fund guarantee of GHC35 million.”

GCB Bank, the second most profitable bank for the last two years, had no collateral for these facilities, hence the full amount was impaired.

The bank, however, chalked some gains in the year under review. The bank’s total assets increased by 9.4% from GHC4.26 billion in 2014 to GHC4.66 billion in the year under review, even though return on assets fell marginally from 7% to 5%.

Operating revenue was GHC863 million in 2015, up 18% or GHC132 million more than the GHC731 million recorded in 2014.

Cost was also kept under control as operating expense incurred in 2015 dropped by 1% from GHC428 million to GHC426 million.

Mr Owiredu attributed this performance to the benefits derived from operational excellence initiatives, and assured shareholders that GCB Bank shall continue to upgrade its risk management systems “to ensure that the bank is resilient to both specific and systematic shocks.”

On his part, the acting Managing Director (MD) of GCB Bank, Mr Samuel Sarpong said the fundamental business of the bank was strong but this was negatively impacted by the impairment charge on a customer.

“We would have performed better than 2014 in terms of profit after tax figures if it had not been for this impairment charge that we had to raise on this particular customer,” he noted.

Mr Sarpong took over affairs as acting MD when the tenure of the bank’s former MD, Mr Simon Dornoo, ended in March 2016.

Mr Sarpong announced that GCB Bank’s 2016 priorities will remain as expanding its corporate banking capabilities, building a profitable and efficient retail banking franchise, as well as streamlining its operations.

The other priorities of the bank would be prudent financial management, human resource training and development, and long-term sustainable growth.