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Business News of Thursday, 25 July 2013

Source: dailyguideghana.com

Poor economic performance affects banks

The recent increases in the prices of petroleum products and poor economic performance have adversely affected the citizens and business sector.

The banks have put measures in place to minimize cost in an increasingly competitive industry.

Currently, the country’s real domestic Gross Domestic Product growth (including oil growth) stands at 7.9 per cent as against the target of 8.0 per cent with the overall budget deficit of 12 per cent as against the targeted 9.0 per cent.

According to Gilbert Hie, Managing Director SG Ghana, the increase in commodity prices is not helping the country on the global market.

Although the performance of the economy is not positive globally, it is manageable, he said.

Mr. Hie disclosed this when the Ghana Stock Exchange (GSE) hosted SG Ghana during its ‘Facts behind the Figures’ programme in Accra.

“Commodity price is always cyclical and all the countries have management plans to protect themselves when price of export products increase. It will definitely be a more difficult period if prices are up and we have a bit of prices going up,” he said.

Mr. Hie further noted that owing to the rate at which government is borrowing it would be very difficult for the country to meet its budget deficit of 9 per cent.

“Unfortunately for the country, interest rate will remain high or the next few months because the rate at which government is borrowing through securities like the treasure bills and bonds is corresponding to the high government deficit,” he said.

He was optimistic government would attain the 9 per cent budget deficit.

Highlighting the company’s performance in the previous year under review, he said the bank’s share price was stable at an average of GH0.45 in 2012.

He said on the back of a higher credit income, the bank achieved a 23.4 per cent increase, with commission and fees income increasing by 27.2 per cent.

He further noted that the bank recorded an increase in its total asset by 29.5 per cent with a strong growth in its loan portfolio which reflected a shift in the bank’s strategy to focus on the real sectors of the economy.

“As a result treasury investments declined in volume,” he said.

The bank decided to shift from the treasury economy to the real economy because the role of the bank in the country is to lend directly to the companies and individuals to help develop the economy rather than to buy Treasury bill and lend directly to the government.

“Our job is not to collect customer deposit to buy Treasury bills from government but the group’s strategy and policy is to lend to the real economy which are trade, export and import as well as individuals and SMEs.”

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