Bad oil loans hit Ghana Commercial Bank

Ghana Commercial Bank (GCB.GH) said on Tuesday its 2009 net profit halved after making higher provisions to cover losses on loans to the domestic oil sector.

Shares in GCB, one of the biggest companies on the Ghanaian stock exchange , fell 4.3 percent to 0.92 Ghanaian cedis on the news it booked a net profit of 18.8 million cedis ($13.3 million), compared to 37.6 million cedis a year earlier.

It also recommended a dividend per share of 3.56 pesewas compared to six pesewas in 2008.

"(An) abnormal increase in the international prices of crude oil and refined petroleum products in 2009 presented serious challenges to the country's downstream oil sector," the company said in its annual report, posted on its website.

GCB, which is the main financier to Ghana's downstream oil sector including the Tema Oil Refinery, said total losses on credit impairment increased to 36.7 million cedis from 8.8 million cedis the year before, with the ratio of non-performing loans to total loans rising to 19 percent from just 2.0 percent in 2008.

Chairman Kojo Thompson said the government last year committed to seeking the funds needed to help settle the bank's exposure to outstanding loans in the oil sector, and added that prospects were more bouyant this year.

"This is buttressed by the economic stabilisation and growth agenda set by the government, coupled with imminent commercial production of oil in the latter part of the year," he added.

Growth in the Ghanaian economy is expected to leap from around 6 percent this year to as much as 15 percent in 2011 -- one of the fastest growth rates in the world -- after the start of output from its Jubilee offshore oil field.

Economists also expect the central bank to continue shaving the prime interest rate from its current level of 16 percent to as low as 14 percent