GCB predicts bouyant outlook

Ghana Commercial Bank (GCB) Limited is confident of a strong overall performance of its outlook which is in line with the general commitment made to grow the bank in the ensuing years.

Simon Dornoo, Managing Director of GCB said: “Our expectation of an improved overall performance for 2010 is unchanged. We expect the interest rate easing cycle to continue, albeit at a slower pace, as efforts are made to stimulate the economy. Business volume growth is expected to be strongest as in the last quarter.”

“We indicated that one of the key focus areas for the Bank is to improve the risk profile of the Bank in order to reduce earnings volatility and achieve sustained bottom-line growth over the long term. Our key metrics on liquidity, assets and capital continue to move in the right direction towards achieving this objective.

“We do not expect further increase in impairment losses for the rest of the year as we work with the government to settle the debt owed to GCB by state-owned Tema Oil Refinery. GCB’s total debt owed by TOR stands at GH¢620, million and out of that over GH¢4,045 million has been paid.”

Mr. Dornoo presenting the bank’s third quarter financial result at a media briefing in Accra explained that the overall performance was an improvement on the previous quarters with a sustained revenue momentum producing improved profitability.

The Bank’s total assets increased by four percent to GH¢1.99 billion, as against the 2009 figure of GH¢ 1.92billion. This was driven by a 12 percent growth in customer deposits to GH¢1.41 billion against the 2009 figure of GH¢1.26 billion.

The growth in deposits came from current and savings accounts products which increased by 13 percent over the period.

Loans to customers decreased by 18 percent to GH¢1.0 billion in line with the bank’s strategy to re-balance the loan portfolio over the medium term.

“We therefore anticipate a further reduction in the size of loan portfolio in the short term as we expect significant loan repayments from the public sector,” he said.
The bank maintained its loan to deposit ratio at 71 percent during the period which reflected in the improved liquidity profile of the Bank.

For nine months period ending September 2010, the Bank recorded a profit before tax of GH¢ 53 million representing an increase of six percent from the 2009 figure of GH¢50 million.

Income for the period to September 2010 was GH¢251.4 million against GH¢ 169.9 million for same period last year representing a growth of 48 percent. This was as a result of improved balance sheet management and further progress made in optimizing risk return trade-offs.

Operating cost of GH¢ 126.5 million for the nine months were 20 percent higher than the GH¢105.6 million recorded for the same period a year ago.

Despite this increase in costs, the Bank recorded an improvement in its operating efficiency with a cost income ratio of 50 percent compared to 62 percent for same period last year.

Impairment were in line with expectations, held relatively flat during the quarter under review.

This resulted in an annualized impairment charge of nine percent against 14 percent at June 2010.

It reflects the increased focus on improving the quality of the loan book. Total impairment charge for the nine months was GH¢71.9 million against 9.9 million in 2009.
“A combination of strong revenue growth and relatively slower cost and impairment growth resulted in an overall improvement in operating profitability,” Dornoo remarked.