Arguments on dividend and shares pop up at GCB AGM

Accra, March 28, GNA - The Annual General Meeting (AGM) of Ghana Commercial Bank (GCB) on Friday saw an argument between the Managing Director, Mr Lawrence N. Adu-Mante and a shareholder over the correlation between dividend per share and the number of shares. Mr. Amoah Awuah, a former Deputy Minister of Finance in the pre independence era and a GCB shareholder, started the argument with an observation that the floatation of 100 million shares last year had led to an increase in the number of the bank's floated shares to over 265 million and this had "neutralised" gains for shareholders in terms of dividend.

He further argued that since GCB had been in the banking business for about 57 years, its shareholders should be enjoying higher dividend than the "repetitive" 0.055 Ghana cedis dividend per share the bank gives.

"I insist that there is a direct correlation between the number of shares floated and the dividend that accrue to shareholders every year. We need to cut down on the shares floated to ensure that existing shareholders enjoy better dividend," he said. On his part, Mr. Adu-Mante also insisted that there was no direct correlation between the number of shares or shareholders and dividend, but rather between the value per share and dividend. He argued that if the value per share was high, dividend were likely to be high as well.

Mr. Adu-Mante also noted that even though GCB had been in existence for more than 50 years, shareholders had been with the bank for only 12 years.

He also insisted that even though the number of shares had increased, the bank maintained its dividend per share at 0.055 Ghana cedis, and as a result it gave away a quantum of 14.575 million Ghana cedis in dividends, representing 57.24 per cent of profit after tax (PAT), which stood at 25.462 million Ghana cedis. Mr. Adu-Mante argued that the bank should rather be commended for giving shareholders more than the mandatory 30 per cent of profit after tax in dividends.

"Moreover the 100 million shares floated through the rights issue last year was over subscribed by a whopping 71.6 per cent and yielded 60 million Ghana cedis, which was 15 million Ghana cedis more than the 45 million Ghana cedis target," he said.

Contrary to Mr. Awuah's assertion that increase in floated shares had adversely affected shareholders, Mr Adu-Mante noted in his report on the review of the bank's operations for 2007 that the Rights Issue undertaken last year was largely responsible for a shareholders' fund increase from 39.2 million Ghana cedis in 2006 to a significant 76.1 million Ghana cedis in 2007, representing 82.8 per cent increase. In his report, Mr. K. G. Osei-Bonsu, Board Chairman, declared a profit before tax of 39,543,580 million Ghana cedis for 2007, which was 318,880 Ghana cedis more than the previous year's and profit after tax of 25.462 million Ghana cedis, representing a slight shortfall from the previous year's 26.015 million Ghana cedis.

He said in 2007 the value of the total assets of the bank rose to 1.145 billion Ghana cedis from 779.201 million Ghana cedis in 2006, adding that total customer deposits rose from 634.572 million Ghana cedis in 2006 to 839.382 million Ghana cedis.

With operating expenses of 99.8 million Ghana cedis, the bank among other things increased its branches from 133 in 2006 to 136 last year, hooked all branches and 11 agencies onto the Wide Area Network (WAN) and completed preparatory and installation activities that would establish a successful e-banking suite of products and services.

Mr. Osei-Bonsu said during the year under review, the bank invested 760.567 million Ghana cedis into various sectors of the economy and also made substantial donations to various institutions and causes as contribution to the welfare of the society.

He noted that 2007 marked the end of the bank's corporate plan for 2005-2007 which saw the bank improving operational efficiency and business positioning.

In the next corporate plan which is from 2008-2010 the Bank would focus on delivery of quality service for customers and creation of value for shareholders.

AGM approved the re-election of three retiring directors and ratified the appointment, Mr Samuel Sarpong as the new Deputy Managing Director (Operations) to replace Mr Roko Frimpong, who was murdered at his Tema residence in June last year. The meeting also approved directors' emoluments of not more than 850,000 Ghana cedis for nine directors of the bank.