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Business News of Sunday, 4 September 2016


‘We are cautious of growing NPLs’ – First Atlantic Bank CEO

At a time that the Non-Performing Loan [NPL] portfolio of commercial banks in the country is increasing, some banks have equally adjusted their strategies to reduce the impact this time round.

The Bank of Ghana’s latest financial stability report indicated that interest income still dominated the income for banks, however, the high rates of the NPLs have forced the banks to cut credit to customers.

A lot of factors including the country’s economic challenges and the power crisis, have also been attributed to the increase in bad loans.
According to the CEO of First Atlantic Bank, Odun Odunfa, the bank has been more cautious this year regarding a possible increase of the NPLs which will put the bank at a risk.

“It’s been a cautious year for us in terms of loan growth; we’ve granted loans but we have been very careful … the economy is what it is so we are trying to be careful so we do not grow loans at the risk of the business,” he stressed.
Figures released by the Bank of Ghana show that the NPL portfolio of banks rose from GH¢ 3.1 billion in March 2015 to GH¢ 4.9 billion as at March this year.

Meanwhile credit to the private sector contributed 94 percent of the total banking sector’s non-performing loans as at March 2016, slightly down from 96.8 percent in March 2015.

It is also worth noting that the over 4 billion cedis debt owed some 12 local banks by SOEs in the power sector, has also impacted on the balance books of banks in terms of NPLs.

Government, through the Ministry of Finance has since announced a road map to settle the outstanding debts.

The Bank of Ghana has also cautioned banks against slashing loans they offer the public following the likely decline in profits due to the risks of NPLs on their balance sheets.

However commenting on how First Atlantic Bank has reacted to this development, Mr. Odunfa was confident the measures put in place have equally improved the bank’s liquidity.

“We have reacted by aggressively going after our Non-Performing Loan Portfolios, complying with prudential guidelines with regards to write offs among others so that the bank is not at risk. Today, First Atlantic Bank is one of the most performing banks in terms of loan portfolio, profitability and liquidity,” the CEO observed.