ARB Apex Bank holds 21st AGM; DDEP hits hard at bank’s profitability  

The ARB Apex Bank PLC has recorded an impressive operational performance in all indicators for the 2022 year under review.

The Bank recorded an impressive, unprecedented Profit Before Tax of GH¢10.4 million but the participation of the Bank in the Government of Ghana DDEP, resulted in significant impairment losses of GH¢113.6 million, leading to a Loss Before Tax of GH¢103.5 million at the end of December 2022.

In spite of the challenging economic conditions under which the Bank operated for the period under review as well as the high inflation rate, significant depreciation of the Ghana Cedi, uncertainty in the global economic outlook and the effect of the Government of Ghana DDEP generally impacted on the performance of the Bank.

The Chairman of the Board of Directors Dr Toni Aubynn, announced these and more at the Bank’s 21^st Annual General Meeting of Shareholders held last week at the Rock City in Kwahu Nkwatia in the Eastern Region.

Operational Performance

The Bank’s total assets grew by 47.0 percent from GH¢702.3 million recorded in 2021 to GH¢1.0 billion in 2022. This was largely influenced by significant growth in Deposits by 63.0 percent from GH¢621.6 million in 2021 to GH¢1.0 billion in 2022.

Investments of the Bank was, however, written down by the effects of the DDEP, but saw an increase from GH¢405.8 million in 2021 to GH¢432.4 million in 2022.

Overall operating income recorded growth of 37.9 percent from GH¢78.2 million in 2021 to GH¢107.8 million in 2022.

Representatives of shareholders and participants at the 21st AGM

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The Ghanaian Economy

According to him, the global economic developments significantly impacted Ghana’s economy in diverse ways. The overall economic growth rate slowed to 3.1% in the year 2022 from 5.1% in the previous year, attributable to slowdown in the agriculture and service sectors. The Ghana Cedi was not left out of the woods, as it came under intense pressure during the year under review, mainly due to sovereign downgrades, lack of access to the international markets and heightened foreign exchange demand pressures, resulting in a sharp depreciation over the period.

The annual inflation rate also rose significantly more than two-decade high to 54.1% in December 2022. However, recent price developments indicated that the inflation surge had peaked, with two consecutive drops to 42.2 percent in May 2023. There was, however, a slight rise to 42.5 percent in June 2023. The decline in inflation was attributed to lower food and beverage inflation, while non-food inflation remained fairly stable.

To support the objective of restoring public debt sustainability, the Government of Ghana launched the Domestic Debt Exchange Programme (DDEP) in the last quarter of the year for the voluntary exchange of approximately GHS137 billion domestic notes and bonds of the Republic, including E.S.L.A. and Daakye bonds, for a package of New Bonds issued by the Republic. This however, excluded Treasury Bills in totality.

Rural Banking Industry Performance

The rural banking sub-sector recorded some improvements in the year under review. Profit Before Tax grew by 44.8 percent to GH¢164.0 million as at December 2022 from GH¢113.3 million recorded a year ago.

Total assets also grew by 25.6 percent year- on-year from GH¢6.7 billion to GH¢8.4 billion at the end of December 2022. Deposits rose by 25.4 percent from GH¢5.9 billion in December 2021 to GH¢7.4 billion. Loans and advances also recorded an increase of 18.2 percent from GH¢2.2 billion to GH¢2.6 billion.

CAR and NPL improved marginally year-on-year to 10.7 percent and 11.2 percent in 2022, from 9.9 percent and 10.8 percent recorded in 2021, respectively.

It is worth noting that, participating in the Government of Ghana DDEP programme had compounded the effects of the already unresolved RCBs locked-up funds with some Securities and Exchange Commission (SEC) regulated institutions. RCBs held significant funds in Government related bonds, which have been exchanged for new holdings under the DDEP. The ARB Apex Bank, however, would continue with its engagements with regulators and government officials to salvage the situation to ensure improvement and sustainability in the industry.

Bank’s Special Initiative

In an address, the Managing Director of ARB Apex Bank PLC, Alex Kwasi Awuah updated shareholders on the Bank’s much awaited Financial Sector Development Project (FSDP) under which the anchor Mobile, Agency, and Internet Banking solutions are to be delivered which is gaining momentum.

He mentioned that the Bank had completed Train-the-Trainers and User Assessment Test (UAT) for the USSD Banking solution.

Mr Awuah also reported that all the 5,000 pieces of the Point of Sale (PoS) devices had been procured and shipped into the country.

“We plan to deploy the Mobile, and Agency Banking Applications by the end of the fourth quarter of 2023, while the Internet Banking Application shall be ready by quarter one of 2024. All the RCBs should, therefore, stand in readiness for the launch of this important landmark project, which if launched is expected to bring more delight and convenience to our esteemed customers, and bring a major turnaround in the fortunes of the RCBs”, he revealed.

The Managing Director of ARB Apex Bank reported that the Bank had taken delivery of three (armoured bullion vans and have been placed in Greater Accra, Ashanti and Western Region while the Bank awaits the next batch of eight (8) for which Letters of Credit (LCs) have already been issued. This according to him is to ensure that the Bank’s Cash-In-Transit (CIT) and personnel are protected from miscreants in the society.

Mr Awuah disclosed that in the Bank’s pursuit of various credit lines to help improve liquidity of the RCBs the following has been achieved.

1. Under the US$4.0 million funding facility from the African Development Bank (AfDB) US$1.0 million has been released to the Social Investment Fund (SIF) and the bank is expecting SIF to release the funds to the Bank for onward disbursement to the RCBs.
2. The Bank is still pursuing a US$40 million co-financing facility from the International Fund for Agricultural Development (IFAD), for which IFAD has secured funding from the Green Climate Fund to be disbursed at affordable interest rates to smallholder farmers. This is to encourage adaptation and climate mitigation practices. The Parliament of Ghana recently approved the Funding Facility, and the necessary institutional arrangements are being put in place towards disbursement.

Additionally, the ARB Apex Bank has been selected as a partner for the implementation of the Affordable Agricultural Financing for Resilient Rural Development (AFFORD) Project, that involves a funding amount of US$69.7 million of which US$13.0 million of blended funds would be channeled to beneficiaries through ARB Apex Bank and the RCBs. The project is a collaborative agricultural finance initiative supported by the International Fund for Agricultural Development (IFAD) and the Government of Ghana. The primary aim is to provide accessible and affordable financing to farmers, and micro, small, and medium enterprises engaged in agricultural- related activities. The project focuses on enhancing food security and uplifting the livelihoods of smallholder farmers, women, and youth groups.

3. The US$10 million facility from the ECOWAS Bank for International Development (EBID), is still being pursued. As part of the continuing engagements towards securing this facility, a high-level delegation led by Dr. Nana George Agyekum Donkor, President of EBID recently visited ARB Apex Bank  from their Lome, Togo, Headquarters of the Bank to help appreciate the operations of the Bank and the sector further. The only challenge to the approval of this facility is the severe negative effect of the DDEP that has thrown the networth and the Capital Adequacy Ratio of the Bank into negative position. It is therefore hoped that quick recovery effort will enable the Bank to access this funding support in due course.

Alex Kwasi Awuah, MD, ARB Apex Bank PLC, (extreme left facing camera) Dr Toni Aubynn, Board Chairman (middle – facing camera) and Kofi Sekyere ESQ, President of Association of Rural Banks and a Board Member of ARB Apex Bank. (Extreme right facing camera) sharing pleasantries with representatives of RCBs after the meeting.

Representatives of shareholders and participants at the 21^st AGM

 

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