Societe Generale promises lending boost

Societe Generale Ghana says in spite of attractive yields on government paper, it will boost lending to the real economy where its impact will be most felt.

High returns on government bills and bonds have deepened concerns about the crowding-out of private sector borrowers, as banks may invest their deposits in these instruments in lieu of lending to businesses.

“Our job is not to take customer deposits and buy Treasury bills; if it was, we could employ just about 10 people and we would be okay,” Managing Director Gilbert Hie said when the bank took its turn at the Facts Behind the Figures programme at the Ghana Stock Exchange (GSE) in Accra.

“The group’s strategy and policy is to really participate in the real economy, and participating in the real economy is not just to lend to the government but massively to the companies, industries, trade, import, export and various sectors of the economy as well as individuals and SMEs.”

He said the bank increased its loans by 51 percent in 2012 to GH¢520million, while financial investments dropped by 31 percent to GH¢121million in the same period -- despite the attractive yields.

Customer deposits also increased by 37 percent to GH¢859million and the bank’s net interest income jumped from GH¢68million to GH¢75million. Pre-tax earnings went up by 24.7 percent from GH¢33million to GH¢41million.

Despite the growth in credit and a 37 percent increase in retail business, the bank’s non-performing loans ratio fell to 7.5 percent from 8.2 percent in 2011. This compares to an industry average of 13.2 percent in 2012.

“This was accomplished on the back of intensified collections on delinquent files, proactive follow-up on potentially sensitive clients by the business units, an improvement of facility monitoring bank-wide and an increase in the loan portfolio,” Mr. Hie said.

The bank has revamped its SME business unit by among others reviewing credit delivery processes to be more responsive to customer needs, he added.

Earlier this year, Societe Generale Ghana and Proparco, a subsidiary of Agence Française de Développement signed a US$10million loan agreement to improve lending by the banks to SMEs.