• Source: graphic.com.gh
• Posted On 23 Nov, 2024
• Tag: News & Reports

The Ada Rural Bank has, for the first time in several years, recorded a dip in profit after tax (PAT), posting GH¢171,966 in 2014, down from the GH¢373,213 it recorded in 2013.

The Chairman of the Board of Directors, Mr David Narh Sabbah, who announced this at the 30th Annual General Meeting of the bank at Kasseh in the Ada East District in the Greater Accra Region, attributed the decrease in profit to challenges within the business environment.

These include more than budgeted expenses associated with running diesel generators as well as the high provisions made for bad and doubtful debts, as borrowers also faced challenges.

The rural is also putting up its head office complex and that has contributed to high cash outflows.

Performance

The bank's total assets increased by 19.5 per cent from GH¢9.1 million in 2013 to GH¢10.85 million. Deposits within the same period grew by 32.82 per cent from GH¢6.46 million to GH¢8.59 million.

During the same period, investment in treasury bills and other government papers increased by 22.11 per cent from GH¢2.43 million to GH¢2.96 million, while total shareholders' funds also increased by 12.71 per cent from GH¢925,155 to a little over GH¢1 million.


In the area of loans and other forms of credit, the bank recorded an increase of 15.90 per cent, from GH¢4.3 million GH¢4.98 million as at the end of 2014.

The board chairman stated the repayment of those facilities had unfortunately not been encouraging and as a remedial measure the Credit Department was being restructured to enable the bank to deal with the issue effectively.

Outlook for 2015

Mr Sabbah added that in order to meet the new Bank of Ghana minimum capital, the Ada Rural Bank would within the coming months engage some citizens Ada and other potential investors to raise GH¢1 million for capital by December 31, 2017.

According to Mr Sabbah, the bank has automated its operations and started sending information to its customers via its SMS platform. It has also expanded the use of e-Zwich in its operational areas, making it possible for customers to transact business without carrying huge sums of money.

He disclosed that the bank would soon introduce mobile to mobile money transfer designed to support and improve its “susu” operations.

Bad and doubtful debt management

The Head of Finance of the ARB APEX Bank, Mr Kweku A. Ababio, underscored the need for the management of Ada Rural Bank to address the issue of bad and doubtful debt, which stands at 37 per cent of its total revenue. He added that "it's an indication of the deteriorating nature of your loans. This is worrying and must be checked to prevent losses in future."

Mr Ababio advised RCBs to strengthen credit management structures to make their loan books healthy and profitable.