HFC Bank focuses on quality growth

Half-year results from HFC Bank show profits before tax surging from GH¢7.8million to GH¢18million, representing about 129 percent growth.

Loans and advances to customers shot up by 40 percent from GH¢271million to GH¢379million, with total assets standing at GH¢688million from GH¢499million last year -- representing 38 percent growth.

Deposits have increased over the period by 39 percent from GH¢259million to GH¢360million. “This deposit level compared to others may look small, but these are lower cost deposits.

“We have been looking at building a quality balanced sheet; so if you look at the asset, it has grown by just 38% which is a deliberate policy as we are looking at being a deposit-driven bank,” Managing Director Asare Akuffo told the B&FT in an interview.

“Certain banks are asset driven but we want to get the deposits and then create assets within the deposits that we have. We therefore have a lot of low cost deposits which are financing our growth and contributing to the bottom line.

“I think you can see from our numbers that we have had very strong growth performance in terms of profits and other areas over the period under review,” Mr. Akuffo said. Operating income went up by 67 percent from GH¢25million to GH¢44million, while operating expenses went up by 31 percent from GH¢17million to GH¢22million.

“Our growth is what I term as ‘quality growth’ and not just a big balance sheet because sometimes people compare our performance with others and say HFC is not growing; but what we are doing is a deliberate strategy where we are looking at the quality of the growth and not just being big; meanwhile you are not generating as much income.

“You can look at return on assets where we are at 4.2 percent, which compares even with the leading banks in the country. We are ahead of our projections for the year and the main strategy is to become the leading retail and SME banking institution in the country.

“We know that when it comes to corporate banking we cannot rub shoulders with the big guys, but we think if we can look at the best of SMEs and looking at our mortgage background and focus on retail, then we will be in business -- and that is what is reflecting on this balance sheet.

“Our NPLs are not at the level we would consider satisfactory, but we are just above 11% and we have improved it by 20 basis points from the previous year; but we are working on it to bring it further to 10%. We will strengthen our loan recovery department.”