GCB grows revenue, DDEP hits profit
GCB Bank PLC (GCB) even though recorded a 24 per cent increase in operating income, the bank recorded a net loss on account of the Domestic Debt Exchange Programme.
The listed bank’s financial performance for last year was underpinned by 24 per cent growth in its operating revenue from GH¢2.4 billion to GH¢3 billion.
This was buoyed by broad growth across all the key revenue lines, including net interest income which rose by 11 per cent from GH¢1.89 billion to GH¢2.1 billion, the rise in fees and commissions by seven per cent from GH¢359.53 million to GH¢385 million, with the bank’s trading income soaring by 208 per cent from GH¢157.54 million to end the period at GH¢487 million.
However, due to the challenging operating environment, which the Chairman of the bank, Jude Kofi Arthur, attributed to the impact of the global environment on the local economy, operating cost went up 29 per cent to GH¢1.6 billion in 2022 from GH¢1.26 billion the previous year, on account of inflationary and currency depreciation effects.
“The bank recorded a loss before tax of GH¢743.5 million in 2022 compared to a profit before tax of GH¢832 million in the prior year. This loss is largely due to the impairment loss on investment in government securities of GH¢1.8 billion,” the chairman said at the bank’s annual general meeting held last Friday virtually and in person.
“It is worth noting that our projected profit for the year 2022 without the impairment would have been in excess of GH¢1 billion,” Mr Arthur added.
GCB Bank’s impairment charges for last year was GH¢2.1 billion, up from the GH¢324.8 million the previous year, GH¢219.64 million in 2020 and GH¢75.52 million in 2019.
Assets
The bank with the largest network also grew total assets from GH¢18.4 billion in 2021 to GH¢21.5 billion last year.
Mr Arthur told the AGM about how the bank grew its customer deposits by 28 per cent from GH¢13.9 billion in 2021 to GH¢17.8 billion in 2022, adding that the bank also maintained a strong balance sheet, which also grew from GH¢18.4 billion in 2021 to GH¢21.5 billion in 2022.
Total loans and advances also went up by 27 per cent from GH¢4.3 billion to GH¢5.5 billion during the period under review.
However, the impaired investments in securities on the back of the DDEP, saw GCB Bank’s equity – the real claim of shareholders after deducting liabilities from the company’s assets – declined by 39 per cent from GH¢2.7 billion in 2021 to GH¢2.0 billion in 2022.
“We started the year 2022 very well with a continued focus on our strategy to drive revenue and profitable growth, enhance the resilience of our balance sheet and reinforce the core strengths of the bank,” the board chairman said.
Mr Arthur indicated that the launch of the DDEP on December 5 last year, which was to pave the way for a sound foundation for economic recovery, had a significant impact on the economy and on the financial performance of banks that participated in the programme including GCB.
“Despite this challenge, I am pleased to inform you that GCB Bank PLC remains a viable business with distinct competitive advantages in the marketplace. Your bank has strong fundamentals and significant potential for further growth and value creation for its shareholders,” the board chairman stated.
He said that was evidenced by the bank’s strong first quarter of the year when it posted Profit-Before-Tax of GH¢302 million.
The Managing Director of GCB Bank, Kofi Adomakoh, said the growth in the bank’s revenue reflected its core strengths and continuing focus on executing its four-year strategy, which started in 2021.
It is geared towards achieving revenue growth and profitability, operational excellence and “drive our people and talent agenda, the MD said, adding that “there is no doubt the recovery of the Ghanaian economy has significant upside for GCB Bank.”
Additional capital
Mr Adomakoh said the bank was also well positioned to benefit from the country’s future economic prospects, leveraging its core strengths to emerge a stronger, adding that the bank’s immediate priority was to rebuild capital through raising equity of GH¢1 billion.
The additional capital is to further improve its capital position through retention of profits and revaluation of landed property, he explained.
Going forward, Mr Adomakoh said the bank would continue to grow its revenues, continually review our risk management framework, reduce and effectively manage our costs and accelerate its digital transformation agenda.
“Growing our revenue, especially from non-funded business will continue to be a key focus area. We aim to further grow our retail banking franchise,” he said, explaining that the retail franchise was a core strength and had significant potential for further growth.
The GCB Bank has over two million customers across its 186-branch network across the country, which is complimented by its digital solutions.
Resolutions
Aside from re-electing four directors of the company who retired by rotation and two others under the Bank of Ghana Corporate Governance directives, the shareholders also authorised the directors to fix the remuneration of auditors.
In a special resolution, the shareholders also authorised the directors of GCB Bank to raise additional equity capital of up to GH¢1 billion through a renounceable rights issue.
They will also procure the additional listing of the issued ordinary shares on the Ghana Stock Exchange.
Any shortfall after the rights issue will be done through either a single or multiple private placement of ordinary shares to investors, among other options.