Zenith Bank earmarks US$50m to support railway sector

Zenith Bank has allocated US$50million to support government’s development agenda with special attention paid to the development of railways within the One District, One Factory policy initiative.

Managing Director of the bank, Henry Oroh, noted that the positive efforts by the Akufo-Addo administration towards achieving macroeconomic stability, will go a long way to reducing the cost of doing business in the country, allow for proper planning and make credit accessible to the private sector for accelerated growth.

“The bank is working in collaboration with IFC and the World Bank to make available some $50 million dollars to support the rail sector The US$50 million-dollar facility would be used to support predominantly SME’s in the manufacturing sector within the railway industry.,” he said.

Mr. Oroh added that the bank believes the policy initiative is workable and achievable in fostering economic development and, therefore, requires active stakeholder participation.

Speaking at a media interaction as part of the bank’s 12th anniversary in Ghana, he added that the bank is ready to support government’s industrialization agenda.

“The World Bank money is not free; it is a commercial loan but the beauty of the World Bank loan is that, it offers an endorsement of the management of the bank, our quality and corporate governance. We know they don’t deal with so many banks in Ghana and we are probably one of the very few they are dealing with,” he added.

He assured that manufacturing companies who qualify will access these funds at ‘privileged rates’, which means beneficiary companies would have slightly improved conditions than the bank’s standard pricing.

Ghana’s railway background

Ghana’s rail network currently operational is approximately 947 kilometers. Despite its woeful inadequateness, it is also faced with an obsolete network and poor track infrastructure, resulting in the closure of greater part of the Western and Eastern lines and the entire Central line.

President Akufo-Addo, upon assumption office, created the new Railway Development Ministry to carry out his administration’s promise of improving the railway network which he believes is the key to transforming the country’s economy.

The restructuring project would start with the reconstruction of the railways along the Eastern and Western lines. The entire project is estimated to cost US$21billion. Already parliament has approved a GH¢500million budget for the ministry.

Amendment of Railways Act

As part of works to revamp the sector, the Ministry disclosed that the government is in the process of reviewing the Railways Act 2008, (Act 779) to separate the regulatory function of the Ghana Railway Development Authority (GRDA) from its mandate of improving railway assets and promoting the development and management of sub-urban railway.

Zenith 2017 financial performance

As at the end of June 2017, the bank accomplished yet another earnings milestone as its gross earnings grew by as much as 27percent over the same period last year to a remarkable GH¢319million, confirming the bank’s excellent ability to optimise its portfolio of activities in a mixed economic climate.

Net interest income also grew from GH¢119million in June 2016 to GH¢152million in June 2017, representing a growth rate of 27percent.

Profit before tax also grew by 10percent from GH¢92million in 2016 to GH¢102million in 2017 while net profit, attributable to shareholders of the bank, grew by 12percent to GH¢66million while total operating income grew by 20percent from GH¢168million in 2016 to GH¢202million in 2017. The bank’s revenue growth was driven in particular by growth in investment income.

Regarding the balance sheet performance, the bank posted an outstanding financial picture of continuous and healthy growth. Earning assets grew by a whopping 54percent from GH¢1.9billion in June 2016 to GH¢2.9billion in June 2017 while total assets also grew by an impressive 44percent from GH¢2.7billion in June 2016 to GH¢3.8billion in June 2017.

With the outstanding performance, the bank as at end of June saw its customer deposits increased from GH¢2billion to GH¢2.9billion registering a growth rate of 39percent year on year.

The bank further strengthened its commitment to increasing shareholder value by growing its shareholder funds from GH¢510million to GH¢639million, a growth of 25percent on last year’s performance.

On the risk side, the bank’s resilience to its financial environment was again demonstrated by increasing its capital adequacy ratio by 10percent to 23.16percent. This gives the bank a buffer of 13.16percent which is more than 100percent above the minimum ratio required by the Central Bank.

The future

Mr. Oroh stated that the bank will not rest on its oars but will keep evolving to get the desired change and when they obtain it, they will definitely evolve again.

“We have taken a cue from the famous quote by Charles Darwin the renowned naturalist and propounder of the evolution theory, which says ‘it is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.’ Our Goal is to be the market leader, in the next five years. The key areas of focus are, customer Service delivery, financial performance and brand repositioning.”