Access Bank Ghana has committed to aggressively growing its loan books due to the unattractiveness of the investment securities market.

At the Ghana Stock Exchange’s (GSE’s) Facts Behind the Figures on April 16, the Managing Director of Access Bank Ghana, Mr Kris Ifeanyi Njokuif, said the bank would be focusing more on lending to customers and businesses this year.

“If you look at the trend over the last five years, the rate on treasury bills has declined from levels of about 25 per cent to about 14.5 per cent currently, so as a bank, even if you do not want to do the real business of lending, you are now compelled to do so,” he stated.

“So as a bank, we will not be making incremental investments in securities, rather we will be creating more loans to support the banking public and businesses,” he added.

He said the bank would be growing its loan books responsibly in sectors that it understood and to customers who were qualified.

High NPLs

Commenting on the bank’s non-performing loans (NPL) ratio which was higher than the industry average, Mr Ifeanyi Njokuif said that was due to a decline in its loan books in 2018.

Its NPLs declined marginally from 32.31 per cent in 2017 to 32.01 per cent in 2018, which was still higher than the industry average of 18.2 per cent.

He said the bank, therefore, intended to use the same strategy of growing its loan books aggressively this year to tackle the NPL issue.

“We want to close the year at 18 per cent,” he said.

He said the bank wrote off about GH¢61 million in 2018.

He said most of those NPLs were in the manufacturing sector, which accounted for 49 per cent.

Expanding to other countries

The managing director also revealed plans by the bank to expand to three African countries before the end of the year.

“We expect to open in Kenya, Cameroun and Mozambique before the end of 2019.

We are currently going through the approvals in these countries and the resources to make this happen have also been identified.

The process has already started and we are sure to complete it by third quarter of the year,” he explained.

Dividends

On dividends, the managing director said the bank was yet to decide on whether to pay dividends for the 2018 financial year or not.

“Once it’s approved by the board, we will communicate to our shareholders at the annual general meeting,” he said.

Financial performance

The bank’s gross earnings increased by 12 per cent to GH¢544 million in 2018 from GH¢485 million in 2017.

This was mainly driven by increase in non-interest income.

Interest income declined marginally to GH¢398 million in 2018 from GH¢411 million in 2017.

The managing director said the reduction was as a result of lower interest income (37 per cent decline) from loans and advances.

Non-interest income increased significantly by 96 per cent from GH¢74 million in 2017 to GH¢146 million in 2018.

The gain was mainly attributed to improved remittance and treasury activities.

Expenses and impairment

Operating expenses increased marginally to GH¢182 million in 2018 from GH¢171 million in 2017 owing to a slight rise in personnel expenses.

This represents a year-on-year increase of seven per cent.

Impairment charge, on the other hand, for the year increased substantially by 127 per cent year on year to GH¢93 million in 2018 mainly due to the impact of IFRS 9.

Balance sheet

Total assets amounted to GH¢3.54 billion as of December 2018, representing a year-on-year growth of 11 per cent from GH¢3.2 billion in 2017.

Customer deposits, on the other hand, also increased year on year by 15 per cent to GH¢2.45 million in 2018 from GH¢2,131 million in 2017.

Deposit analysis

Demand deposits grew by 28 per cent to GH¢1.21 billion in 2018 from GH¢942 million in 2017.

Capital adequacy ratio also increased significantly to 20.35 per cent in 2018 as a result of the new capital injection (new minimum capital requirement).

Mr Ifeanyi Njokuif said liquidity ratio remained high as it increased significantly to 75.25 per cent in 2018 from 61.96 per cent in 2017.