GCB Bank maintains impressive profitability as assets rise 25%
The management of the country's most widely spread bank, GCB Bank, has expressed optimism in the long-term prospects of the bank based on enlarged quality assets, diversification of the loan book and a long-term strategy to deliver a sustainable and profitable business intelligence in the future.
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The Managing Director of the bank, Mr Simon Dornoo, who presented the bank's annual results to shareholders at the annual general meeting on May 22 in Accra, said: "We continued to diversify our loan book by increasing lending to retail market which has been successful. ...I can confidently say the future of our institution looks bright."
GCB Bank, by virtue of it being widespread across the country, incurs a lot of operational costs unlike its peers.
Although faced with an additional challenging environment in 2014 with the energy crisis as the headline challenge for all businesses, the bank continued to make progress as its profitability remained sound.
Profit before tax went up by 25 per cent to GH¢395 million as the bank's total income increased to GH¢732 million in 2014, up 29 per cent from GH¢567.24 million recorded in the previous year.
According to Mr Dornoo, the increased revenues were due to growth in all business lines, including consumer, corporate as well as investment banking.
Even GCB Bank's costs went up by 58 per cent, including technology cost of GH¢95 million, which worsened the cost-efficiency ratio from 48 per cent to 59 per cent. The bank managed to record a higher profit for the year at GH¢282.14 million, up by 23.1 per cent, from the GH¢229.19 million.
The asset base of the bank also increased from GH¢3.4 billion in 2013 to GH¢4.26 billion at the end of 2014, increasing the value of the bank sevenfold, according to the managing director, from GH¢395 million five years ago to GH¢1.4 million at the end of last year.
Outlook
GCB’s rebranding has so far been well received by the market but the bank believes it should be augmented with a change in service culture and brand network modernisation and optimisation.
“We are making progress in these initiatives and hope to rollout our newly refurbished branches starting the last quarter of 2015,” Mr Dornoo said.
The branch optimisation exercise will certainly involve some rightsizing of staff, which the management hoped would be done carefully within the due process and consultatively.
Board chair
The Chairman of the Board of Directors, Mr Daniel Owiredu, also touted the progress of the bank, saying earnings per share increased by 23.3 per cent to GH¢1.06 from GH¢0.86 the previous year.
The bank, therefore, recommended a dividend of GH¢0.35 per share, amounting to a total payout of GH¢84.8 million for 2014. The payment also means that GCB Bank increased its dividend payouts from GH¢4.5 million in 2010 to GH¢84.8 million, a whopping 1,784 per cent change over the five-year period.
Mr Owiredu said as part of placing the bank on a sound and profitable path for the years ahead, GCB would participate in funding public-private partnerships as part of the Ghana Infrastructure Investment Fund, adding: “We will actively support the development and growth of our people and nation in areas of our relevance as the true national bank.”