First National Bank Ghana improves total assets
First National Bank Ghana Ltd , increased its total assets from GH¢3.1 billion in 2022 to GH¢3.7 billion in 2023.
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The bank’s total liabilities also went up to GH¢3.4 billion in 2023 from GH¢2.8 billion the previous year, bringing the bank’s net worth, which is total assets minus its total liabilities for the year in review, to GH¢0.3 billion.
The bank’s Net Interest Income (NII), the difference between the revenue generated from its interest-bearing assets and expenses incurred while paying its interest-bearing liabilities, also rose from GH¢118.8 million to GH¢203.5 million in 2023.
According to the bank’s financials posted in the dailies last week, operating income net of impairment stood at GH¢290.1 million in 2023 as against GH¢50.1 million the previous year.
Voted the Strongest Global Banking Brand by Brand Finance Global 500 Report in 2023, it posted a loss of GH¢2.6 million at the end of the 2023 financial year.
This is a drastic reduction in a loss of GH¢340.7 million recorded the previous year.
Financial soundness
Trends in key financial soundness indicators were, however, mixed.
The Capital Adequacy Ratio (CAR), adjusted for reliefs, was 13.6% in February 2024, above the regulatory minimum threshold of 13.0%, compared with 12.6 per cent in February 2023.
CAR measures how much capital a bank has available, reported as a percentage of a bank's risk-weighted credit exposures. The purpose is to establish that banks have enough capital on reserve to handle a certain amount of losses, before being at risk for becoming insolvent.
With this development, the banks are more likely to withstand a financial downturn or other unforeseen losses as happened when the government implemented the DDEP, which severely impaired their balance sheets, with the majority of them recording heavy losses in 2022.
Liquidity and profitability ratios also improved compared to a year earlier.
The non-performing loan (NPL) ratio, which is calculated by dividing the number of non-performing loans by the total number of loans in the sector, on the other hand, increased to 24.6%, reflecting the downgrading of several large exposures to the banks.
However, NPLs, excluding the loss category, remained in single digits at 9.8%.
Meanwhile, the report said, “Banks impacted by the DDEP in 2023 continue to implement their approved capital restoration plans in line with BoG’s requirements.
“The Bank of Ghana expects that early completion of recapitalisation efforts will lead to a more resilient banking sector positioned to provide stronger support for real sector recovery.”
Banking sector rebound
According to the Bank of Ghana in its March Monetary Policy Committee report, the banking sector’s performance rebounded after implementing the Domestic Debt Exchange Programme (DDEP).
For instance, in the first two months of 2024, the bank's total assets increased by 21.0 per cent while total deposits and advances rose by 25.5% and 1.8% respectively.