GCB Bank held its annual general meeting today, during which the bank's Managing Director, Kofi Adomakoh, discussed the bank's financial performance in 2022 and outlined the challenges faced, along with the proposed turnaround plan.
The bank's financial performance in 2022 was impacted by various factors, including the Domestic Debt Exchange Programme (DDEP) initiated by the Ghanaian government. This program involved exchanging eligible bonds for new ones with lower coupons and longer tenors.
As a result of the DDEP, GCB Bank incurred a significant impairment loss on its investments in government securities, leading to a deterioration of the bank's capital adequacy ratio.
GCB Bank reported a loss before tax of GHS 743.5 million in 2022, compared to a profit before tax of GHS 832.0 million in the previous year.
The loss was primarily attributed to a GHS 1.8 billion impairment charge on investments in government securities due to the bank's participation in the DDEP.
Furthermore, the bank's capital adequacy ratio declined to 7.6% by the end of December 2022, below the regulatory limit and a significant drop from 20.9% at the end of December 2021.
Despite the challenging financial results, Adomakoh emphasized the bank's resilience and potential for sustainable profit growth and enhanced value to shareholders.
“Despite these setbacks, GCB Bank demonstrated resilience in its operational performance,” stated Adomakoh.
He highlighted the bank's achievements in revenue and pre-provision profit, driven by an expansion of the balance sheet, increased customer base, and high adoption rates of digital offerings.
GCB Bank's operating income grew by 23.8% from GHS 2,427.5 million in 2021 to GHS 3,005.7 million in 2022. Net interest income also increased by 11.2% to GHS 2,107.5 million, supported by higher volumes and yields on earning assets.
The bank focused on growing its retail banking franchise, which contributed significantly to its revenue. The retail business expanded, serving over 2 million customers through the branch network and digital solutions.
Customer deposits witnessed a 28.0% increase, reaching GHS 17,791.4 million, driven by new customer acquisition and retail deposit mobilization campaigns.
To address the impact of the DDEP on its capital adequacy, GCB Bank presented a robust turnaround plan at the meeting. The plan includes raising additional equity capital of GHS 1 billion through Common Equity Tier 1 and Additional Tier 1 capital, retaining profits, and revaluing landed property.
The bank aims to rebuild its capital adequacy ratio to at least 18.0% by 2025.
“Looking ahead, GCB Bank remains focused on revenue growth, risk management, cost optimization, and digital transformation,” stated Mr. Adomakoh.
The bank aims to enhance revenue generation, effectively manage risks, optimize processes for cost savings, and provide innovative digital solutions to customers. Despite the challenges faced in 2022, GCB Bank is determined to emerge as a stronger and customer-focused institution, leveraging its core strengths and capitalizing on opportunities.
The meeting concluded with shareholders expressing confidence in GCB Bank's turnaround plan and its commitment to navigating the challenges and achieving sustainable growth in the future.