Bayport halts loans to nurses amid migration concerns

BAYPORT Savings and Loans has suspended loans to nurses, citing concerns over the high rate of medical professionals leaving the country after taking the loans.

The company indicated that a significant amount of its non-performing loans (NPLs) was coming from that sector, hence the decision.

In an interview with the media after the company took its turn at the Ghana Stock Exchange’s Fact Behind the Figures Series, the Chief Executive Officer of Bayport, Akwasi Aboagye, said: “We have changed our underwriting rules so for the last one year, we haven't done any disbursement to them because that is where the NPLs are very pervasive.”

He said the level of the company’s exposure in the sector could have been worse if it didn’t act fast.

“We actually nipped it in the bud before it became a very big problem for us. That's why we stopped it, because when we saw the trend, we then saw there was the need for us to look at it.” 

“And when we tried to put in measures, all the measures didn't work, so then the decision was to put it on hold until we can see a bit of difference. So, that hasn't really changed, and that's why we haven't come back to that,” he said.

Investments in collections 

The CEO said the company has also invested in technology and personnel to improve on its loan collections. 

He said the company has also hired lawyers to help chase customers who have found new employment and are not paying their loans.

“We have field workers who are now going around trying to find customers and getting them to pay, and we have a very strong call centre which reaches out to customers and get them to pay,” he said.

Mr Aboagye said all those investments have resulted in an improvement in its NPL ratio, which dropped from 15.5% in 2022 to 13% in 2023.

He said the company had also tweaked its rules a bit to make sure that it contained the NPL challenge. 

“So, although it's a challenge, it's not as big a challenge for us, because we understand what we are doing, and we continue to change the way we do things so that we can continue to serve our customers, because you can't stop serving all of your customers because of a small population who are not paying,” he said.

Change of strategy 

Mr Aboagye also explained that the company had over the years tried to keep a funding base that keeps the cost of funds low.

He said since 2023, customer deposits have now become the biggest funding pool for the business, amounting to 31%.

This is followed by bonds, banks (20%), direct foreign investment (25%) and shareholders (13%).

He said the business was still on track and recovering from a lot of the issues from 2023, indicating that the net interest income through different sales strategies had ensured that net interest income has increased by almost 48%, compared to the same time last year.

“This is a testament to some of the good work we have done, not only selling, but selling the right mix to ensure that we have a sustainable business.

“Our cost-to-income ratio, as I did indicate, is also down 5% compared to the same time last year, but it's really a function of the inflation situation,” he said.

The company’s profit also increased by 33% from GH₵16.4 million to GH₵22 million, with loans and advances also increasing by 22%.

“If you look at customer deposits, we are investing a lot in growing our customer deposits, and that really is a big focus area for us,” Mr Aboagye said.