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Business News of Wednesday, 28 July 2021

Source: thebftonline.com

ADB maintains post-GAT turnaround with profit up 80% in H1

Dr John Kofi Mensah is Managing Director of the ADB Dr John Kofi Mensah is Managing Director of the ADB

After years of underperformance, the Agricultural Development Bank (ADB) appears to have turned the corner permanently – with its unaudited half-year results showing post-tax profit growing by some 80 percent.

The bank recorded GH¢55.73million for the first half of the year against GH¢30.96million in a comparable period last year. This follows a similar impressive performance from the state-owned bank in the thick of the unforgiving operating environment of 2020, owing to the advent of COVID-19, when the bank saw its profit after tax (PAT) grow by 341 percent year-on-year (YoY) from GH¢14.82 million to GH¢65.41 million.

The bank’s turnaround follows an injection of GH¢127 million by the Ghana Amalgamated Trust – a special purpose vehicle (SPV) that was established by the state in 2019 to support solvent and well-run indigenous banks – which were otherwise having difficulties in meeting the new minimum capital requirement [GH¢400 million] deadline – in meeting their obligations.

This, in addition to a successful listing of the lender on the Ghana Stock Exchange (GSE) in 2016, has been credited for the change in the bank’s fortunes.

ADB’s half-year performance was in no small part due to a growth in net fees and commission, and net interest income as well as a reduction in Non-Preforming Loans (NPLs).

A perusal of the financial statement shows that net fees and commission and net interest income grew by 51.4 percent and 26.1 percent to GH¢45 million and GH¢239 million respectively in June 2021, while the ratio of NPLs to gross loans dropped by 6.49 percentage points to 31.8 percent.

At a time when many lenders have tightened their purse-strings, loans and advances by the agriculture-focused lender were up 24.28 percent to GH¢2.07 billion from GH¢1.65 billion, coinciding with a 25.75 percent rise in customers’ deposits YoY.

Total assets have appreciated by 25.58 percent to GH¢6.17billion, with the balance sheet growing to GH¢11.34 billion.

The bank continues to remain highly liquid, particularly with reference to meeting its short-term obligations, with a ratio of 112.96 percent and its capital adequacy ratio at 13.31 percent.

Also, Earnings-Per-Share (EPS) of the Accra bourse-listed bank stood at 21.29 Ghana pesewas at the end of 2020 – up 138.6 percent from 8.92 pesewas the previous year.