Republic Bank Ghana bounces back; Records profit after two years of losses

BY: Emmanuel Bruce
The Board Chairman Mr Charles William Zwennes (3rd right) addressing the shareholders at the AGM.
The Board Chairman Mr Charles William Zwennes (3rd right) addressing the shareholders at the AGM.

Republic Bank Ghana, formerly known as HFC Bank, has returned to profitability with a profit after tax of GH¢45.43 million in 2017 after two successive years of making losses.

The bank’s total assets also increased from GH¢1.89 billion in 2016 to GH¢2.10 billion in 2017, representing an increase of 10.7 per cent.

This was disclosed by the Board Chairman of the bank, Mr Charles William Zwennes, at its annual general meeting in Accra.

He said the bank’s impressive performance in 2017 was attributed to the strong recoveries of its loans and advances, accounts management and prudent investments.

Its capital adequacy ratio also increased from 11.5 per cent in 2016 to 23.14 per cent in 2017, which is well above the regulatory minimum requirement of 10 per cent and the Bank of Ghana’s comfort level of 12 per cent.

This was also attributed to the increase in the bank’s stated capital by GH¢50 million through a rights issue and the profit recorded at the end of the year.


Rights issue

The board of directors passed a resolution to increase the stated capital of the bank by an additional GH¢50 million via a renounceable rights issue to shareholders.

The rights issue was approved by the Securities and Exchange Commission (SEC) and the Ghana Stock Exchange (GSE).

The board chairman pointed out that the offer which begun on December 4, 2017 and ended on December 20, 2017 resulted in an increase in the bank’s stated capital from GH¢96.19 million to GH¢146 million.

He said the increase in capital was to ensure that the bank met the Bank of Ghana’s (BoG’s) previous minimum capital requirement of GH¢120 million by the end of 2017.

In compliance with the new minimum capital requirement of GH¢400 million by December 2018, he said the bank was pursuing another rights issue which sought to raise GH¢255 million.

He, therefore, urged all the stakeholders to support the move when the proposed rights issue comes up for voting to enable the bank to continue its rebuilding process.

Deposit mobilisation

The Managing Director of the bank, Mr Anthony Jordan, for his part indicated that as part of its efforts to maintain its deposit mobilisation drive, the bank introduced a ‘susu plus’ campaign.

“Susu plus is one of the seven unique deposit products which was introduced into the market to increase awareness of the bank and to drive traffic to the banking halls,” he stated.

“The campaign yielded positive results in deposit growth as total deposits continued to expand,” he added.

He said the bank’s total deposits grew from GH¢1.6 billion in 2016 to GH¢1.7 billion, representing an increase of 9.9 per cent.

Asset creation

The managing director also pointed out that its asset creation initiative was to grow the loans and advances portfolio by booking quality loans.

He said a decision was, therefore, taken at the beginning of the year to focus on accounts monitoring and management with the view of ensuring that performing loans did not deteriorate, as well as recovering delinquent loans.

“The bank’s decision to focus on accounts monitoring and management adversely affected the size of the loan book which shrunk from GH¢919.44 million in 2016 to GH¢809.74 million in 2017,” he noted.

Mr Jordan indicated that deposits were channelled into investments in government and related investment securities to generate income.

In the course of the year, he said, interest rates and spreads on government securities begun to decline, prompting the need to refocus attention on asset creation.

Cost management

Touching on cost management, Mr Jordan said the bank continued to be prudent in its cost management by encouraging a cost savings culture.

He said its cost management initiative sought to improve costs by streamlining employment and managing replacements emanating from normal staff attrition and subjecting all projects to rigorous cost benefit analysis before implementation.