ADB posts 400% rise in profit

BY: Maclean Kwofi
Dr John Kofi Mensah — MD, ADB
Dr John Kofi Mensah — MD, ADB

The Agricultural Development Bank PLC (ADB) has recorded a profit before tax of GH¢65.4 million in 2020, up from the GH¢14.9 million recorded in 2019.

This represented over 400 per cent growth in performance in 2020, occasioning a return on equity and return on assets of 7.69 per cent and 1.14 per cent.

Addressing the 34th annual general meeting (AGM) of the bank in Accra on August 12, its Managing Director (MD), Dr John Kofi Mensah, said the impressive performance was influenced by the bank's three-year strategic plan.

"We are working with a three-year strategic plan which will end in 2023. Our expectation is that the growth trajectory will continue for a long period," he said.

Balance sheet

The size of the bank’s balance sheet experienced a significant growth over the year from GH¢4.6 billion in 2019 to GH¢5.7 billion in 2020, an increase of 24 per cent.

This was bolstered in part by the bank’s improved holdings in investment securities in line with its strategic objectives, just as it saw an expansion of 30 per cent in net loan assets from GH¢1.5 billion in 2019 to GH¢1.9 billion in 2019.

The non-performing loan (NPL) portfolio of the bank witnessed significant reduction from 41 per cent in 2019 to 34 per cent in 2020.

The bank's target is to bring the NPL ratio within industry brackets by 2023. Deposits grew by 26 per cent from GH¢3.4 billion in 2019 to GH¢4.2 billion in 2020.

Capital adequacy ratio

By the end of 2020, the capital adequacy ratio and the Basel Committee inspired capital requirement directive were 16.5 per cent and 14.5 per cent, respectively, both above the minimum regulatory requirement.

Really, an intricate analysis of the financial performance of the bank will show that it improved in each and every sphere; interest income saw a growth of 28 per cent from GH¢419.2 million in 2019 to GH¢628.9 million in 2020 while gross non-interest revenue also increased by 12 per cent to GH¢158.7 million in 2020 compared to GH¢141.8 million in 2019.

In the area of cost savings and management, total operational expenditure was well contained thus finding expression in the overall cost to income ratio of 78.2 per cent at year end, a marked upgrade from 2019 position of 92.2 per cent.

All the relevant indices presented a positive outlook providing basis for the bank climbing up three places from the 20th position to 17th position in the ranking of banks in 2020.

Strategic objective

The MD stated that in line with its strategic objective, the bank had increased its agricultural loan portfolio to 50 per cent of its total loan portfolio.

He said the bank in 2020 deepened its financial intermediation to players in the agricultural value chain.

“To provide ready market for the expected increased farmers’ output under the Planting for Food and Jobs, the bank approved an amount of GH¢70 million as working capital to the National Food Buffer Stock Company Limited (NAFCO) to buy off excess produce for storage as buffer stock,” he said.