GCB Bank bounces back to profit ways
Ghana’s biggest universal bank by assets, GCB Bank, has made a dramatic return from its loss-making position in 2022 to record huge profit last year, according to its 2023 financial report.
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The country’s premier bank posted a profit of GH¢994.1 million last year as against a huge loss of GH¢555.8 million the previous year, a development, which is expected to assuage the fears of its shares and restore hope in the 70-year-old financial institution.
There is no official comment as to how the bank returned to profit ways in style at the time of going to press but sources close to the bank said management had been working hard to turn the corner after the bank was heavily hit by the implementation of the government’s Domestic Debt Restructuring Programme (DDEP).
Other figures
In the period under review, the bank also managed to reduce its net loan impairment from GH¢274 million in 2023 to GH¢199.3 million.
The bank’s financials, which were posted in a release by the local bourse, Ghana Stock Exchange (GSE), showed loans and advances to customers also rose significantly from GH¢5.5 billion to GH¢6.7 billion.
Total assets also drew exponentially from GH¢21.3 billion in 2022 to GH¢26.9 billion in the year under review, affirming its lead as the bank with the biggest value of assets in the country.
The stated capital of the bank, however, remained the same at GH¢500 million but total liabilities increased from GH¢19.5 billion in 2022 to GH¢24.1 billion in 2023.
In the third quarter of the year 2022, Ghana’s Debt Stock was assessed as having reached unsustainable levels culminating in a move by the government to restructure its debts in line with an agreement with the Bretton Wood institutions for a $3 billion bailout programme.
The DDEP was a voluntary invitation to holders of selected Government of Ghana (GoG) debt instruments to voluntarily surrender them in exchange for new bonds issued at new rates and maturities.
The new rates and maturities meant a value loss for investors, including banks. After several engagements with the Ministry of Finance (MoF) and assurances of some regulatory forbearances, the banking industry signed up for the DDEP. The direct impact of the bond exchange by banks meant their assets were now impaired and significant impairment losses needed to be recognised by the affected banks, according to a report authored by PwC, an international accounting and auditing firm.
From the survey done by PwC, it was realised that the impact of the DDEP on banks' businesses was varied and far-reaching: profitability, liquidity management, solvency, investor perceptions, and asset portfolio quality dominated the responses on impact.
Bank executives continued to predict that there would be challenging economic hurdles in the future, but they remained confident in their full and quick comeback, as realised by GCB Bank and evidenced in its 2023 financial results.
Resilience
Earlier, during the celebrations of the bank’s 70th anniversary, the Managing Director (MD) of GCB Bank, John Kofi Adomakoh, said the bank, which had achieved many successes and also encountered challenges, had shown resilience and always recovered.
He said the bank sought to show more of that resilience in its ability to support its customers to grow, expand their businesses and support the communities in which it operated.