By: Fred Yaw Sarpong
UT bank’s revenue lines remained strong in 2013. The bank’s interest income was GHc188 million, representing a 40% increase from the previous year, while non-funded income increased from GHc43 million to GHc53 million.
However, the 60% growth in interest expense, attributed to the higher average rate on government securities, negatively affected the bank financial performance. Total income increased by 19% to GHc125 million, a comparatively slower growth.
The Chairman of the bank, Mr. Joseph Nsonamoah announced this at the bank’s 2013 Annual General Meeting (AGM) held in Accra. The AGM was to consider and adopt the statement of account of the company for the year ended 31st December 2013 together with the reports of the directors.
Mr. Nsonamoah noted that ‘given the negative impact of the tough economic conditions on our customers’ businesses, the bank took a more prudent stance with regard to our provisioning. We consequently increased the charge for doubtful debt to GHc24 million, an increase of 83%. The aforementioned resulted in a profit before tax of GHc13.4 million in 2013, representing a 48% drop compared to the previous year.
He stated that in December 2013, the bank received US$10 million from Amethis Finance, a Paris based private equity firm dedicated to investing in Africa. ‘The funds supported our capital, enabling us to close the year with a capital adequacy ratio (CAR) of 12.2%, marginally above the Bank of Ghana (BoG) required minimum,’ he added.
He said the bank also received medium term debt funding from reputable companies such as the African Development Bank (AfDB), European Investment Bank and Ability Global Microfinance Funds. ‘We are happy to build relationships with institutions such as these who like us, support the growth of the SME sector,’ he added.
Prince Kofi Amoabeng, the Chief Executive Officer (CEO) told the shareholders that their bank assets crossed the one billion mark to GHc1.34 billion, up by 35% compared to 2012. According to him loans and advances continued to be the dominant asset line and grew by 35% to GHc917 million.
‘We however improved the structure of our assets, investing more in liquid interest earning assets by growing our short term investments by 95% to GHc120 million. Short term investments therefore accounted for 9% of total assets compared to 6% in the previous year,’ said Mr. Amoabeng.
On the liabilities end, Mr. Amoabeng noted that the bank’s deposits grew by 15% to GHc920 million. Total current and savings accounts amounted to GHc289 million, compared to GHc333 million in 2012. ‘Attracting cheap deposits was a challenge for most banks during the year, particularly due to the change in regulation, which allowed non-bank financial institutions to hold deposits. We therefore had to rely on growing our expensive deposits to sustain our business,’
He mentioned that they have invested heavily in their e-business platform and expect that this will translate into faster and simpler services in 2014.
He said the introduction of the mobile banking platform will serve as a foundation for implementing other branches and agency banking products. ‘The import of these to our business cannot be overemphasized in the light of the need for growth in cheap deposits.’
As part of their expansion drive they have commercial operations on Tamale, Suame, North Industrial Area, and East Legon. The East Legon branch is the bank’s first virtual branch, providing 24 hour service. The branch will also house the newly created Private Banking and Wealth Management Units.
The board of directors of the bank took a tough decision not to pay out dividend in respect of the financial year ending 31st December, 2013.
‘Supporting our capital adequacy is essential for our operation as a lending bank, and a dividend payout would negatively affect this. Our financial performance over 2013 is only temporary and I ask that, we as shareholders will grant the bank every support during this period,’ early said by the Chairman of the bank.