The Royal Bank to embark on aggressive deposit mobilisation
The Royal Bank (TRB) is to embark on a more aggressive deposit mobilisation drive to enable it to raise more funds to support its loan book.
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This is in spite of the fact that the bank was able to mobilise GH¢137 million from deposits within the 16 months it has been in operation.
According to the bank, it intends to offer not only short to medium-term loans to its customers but also long-term loans to enable companies, including small and medium-scale enterprises (SMEs), to borrow funds to support long-term projects.
The Head of Finance, TRB, Mr David Okyere-Nyarkoh, disclosed this when the bank met with a cross section of financial journalists in Accra to explain the reasons for the banks impressive financial performance after just 16 months in operation.
“We are determined to offer long-term loans to support businesses because most of the projects they undertake are long-term projects and they require long-term funds to enable them to carry them out successfully,” he said.
Economic analysts have always held the view that raising short-term loans to finance long-term projects are nothing less than suicidal but many banks in the country are mostly reluctant to give long-term loans to businesses to finance long-term projects.
For instance, in the housing sector, real estates developers are forced to pass on the full cost of the short-term loans they procure for their long-term projects to their customers, thereby making their houses on sale expensive beyond the reach of many people.
It is, therefore, expected that should TRB be able to carry out its pledge, businesses will heave a sigh of relieve, as they will be able to better concentrate on their projects.
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On the financial performance of the bank, he attributed the success story to a number of factors, including the volume of investment, forex (FX) trading income, branch expansion and what he described as the effective cost management practice driven by a competent and dedicated skilled workforce.
Mr Okyere-Nyarkoh said the bank was also able to open 12 branches within a year of operations, a development which helped in the deposit mobilisation effort.
He said the bank’s finance team was also able to manage its cost effectively and efficiently during the period under review.
Financial performance
TRB posted impressive results in its first year of operation, as it recorded a profit before tax of GH¢13.1 million.
Its net interest income was GH¢32, 943, 232, while their operating income stood at GH¢38, 943, 232.
Mr Okyere-Nyakoh also stated that the bank’s stated capital of GH¢100 million, which was above the regulatory requirement of GH¢60 million, made it possible for the bank to put in place the appropriate infrastructure and branch networks during the period.
He said the bank also made more than GH¢5 million from forex trade and intended to do more to boost its forex trade.
BoG forex directives
The Head of Strategic Planning, Research and Corporate Affairs of TRB, Mr Kwame Baah-Nuakoh, said for the bank to review its directives on the forex, it was important for it to critically consider the empirical evidence on the ground.
He said any hasty review based on sentiments raised by the public may be detrimental to the country.
Mr Baah-Nuakoh said due to the Bank of Ghana’s (BoG) directives on forex, customers now did not want to deposit their dollars in the bank and preferred to keep them, a situation which had affected their forex mobilisation.
He, however, said the bank was doing all it could to get forex to help its customers who need it.