[Ghana] Standard Chartered Bank sees growth

At the bank’s annual general meeting in Accra, Chief Executive Officer Jerry Kweku Bedu-Addo said despite the tough times, the bank remains liquid and strongly capitalised.

The bank’s capital adequacy ratio at the end of 2014 was 15.67 percent, well above the minimum prudential limit of 10 percent plus the additional prudential buffer of 3 percent recently advised by the Bank of Ghana.

Loans and advances grew by 13 percent to GH¢1.28billion in 2014, but due to the hostile economic reality during the year and the disruptions to working capital cycles and existing Prudential Guidelines to banks on loans processing, the bank saw its non-performing loans increase from 15.54 percent in 2013 to 27.36 percent in 2014.

The bank delivered a double-digit revenue growth of 24 percent, growing from GH¢420.1million in 2013 to GH¢521.1million.  The bank enhanced core and cross-sell business and aggressively improved focused sales efforts in all products and segments.

Total assets grew by 17 percent to GH¢3.5billion while shareholder valued is sustained as earnings per share improved marginally to GH¢1.78, with return on average equity of 40percent.

The net interest income grew by 19 percent to GH¢333.8million on the back of loans and advances growth of 13 percent. The non-funded income grew by 34 percent to GH¢187.8million on the back of strong performances in foreign exchange, trade and wealth management during the second half of the year.

“Our strong top-line growth was achieved despite the liquidity squeeze and foreign exchange supply disruptions experienced during the year,” he said.

The bank’s objective to keep cost growth within tolerable limits was undermined by higher utility and higher energy costs associated with off-grid solutions. “Under escalating cost of living conditions, upward adjustments had to be made to staff costs to remain competitive on the market and also ensure talent retention.”

Costs therefore increased by 53 percent to GH¢197.8million compared to the same period in 2013, which culminated in a surge of the bank’s cost income ratio to 38 percent compared to 31 percent in the same period of 2013.

Impairment charges increased from GH¢17.4million to GH¢49.1million, a reflection of the stressed economic conditions.

The bank’s dividend payment per share saw a drastic drop from GH¢1.15 in 2013 to 35pesewas in 2014. But Mr. Bedu-Addo explained that despite the strong top line performance of 24 percent growth in operating income, rising cost and impairment charges undermined what could have translated into profits and earnings.

He added that the proposed dividend payment was also impacted by the Bank of Ghana’s directive for a 3 percent capital buffer above the statutory minimum of 10 percent. “This meant that we retained an additional GH¢63million from our 2014 profits to meet this requirement, as well as position the bank for future growth”.

Chairman of the bank, Ishmael Yamson, noted that despite all these challenges, the bank’s performance outlook for 2015 remains positive. However, he added that the bank will continue to maintain a cautious approach to growth in risks assets while it works on restoring stressed assets back into the regular portfolio within the shortest possible time.

“I remain very confident in the ability and commitment of the board, management and our staff to deliver a high standard of discipline, execution and conduct during 2015, in order to successfully sail through these turbulent times.”

thebftonline.com