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Banking consultant, Dr Richmond Atuahene, has urged local banks within the country to be prudent in their risk assessment to enhance on their non-performing loans.
His call follows the comparably better performance of foreign-owned banks to local banks between the years 2019 and 2020.
Data from the financial statements of some leading banks within the country for the year ended 2020, shows a rise in profits for a few and a few declines for others, foreign banks, however, outperform the local ones.
This can be gleaned from the Summary Statements of Comprehensive Incomes of 10 of Ghana’s top banks during a year during which COVID-19 ravaged all aspects of the economy.
For instance, ADB, out of the ten banks reviewed by Citi news , saw a rise of about 340 percent in its profits, the very best jump from 2019 to 2020.
The bank ended 2019 and 2020 with profits of about GHS14.8 million and GHS65 million respectively.
The Consolidated Bank Ghana, saw its profit drop the steepest out of the ten banks reviewed, which is by about 33 percent, reducing from about GHS70 million in 2019 to GHS46 million in 2020.
A bank like Ecobank Ghana with one among the most important asset bases within the banking sector saw profits further improve by about 23 percent, from over GHS440 million in 2019 to over GHS540 million in 2020.
GCB’s profit only increased marginally by about 4 percent from about GHS420 million in 2019 to about GHS 440 million in 2020.
Other banks like Standard Chartered, Zenith, and Access however saw profits sour by over 30 percent from 2019 to 2020.
Standard Chartered Bank for instance saw its profits jump by about 70 percent from GHS281.9 million in 2019 to about GHS478 million in 2020.
Access Bank and Zenith Bank saw similar percentage increases in their profits, about 38 percent, with profits of Access Bank rising to over GHS240 million in 2020 from over GHS170 million in 2019, while Zenith Bank ended 2020 with about GHS340 million from about GHS245 million in 2019
Even though its profit numbers were still high in 2020, over GHS250 million, Fidelity Bank still saw its profitability wane slightly by about negative 3 percent from about GHS260 million in 2019.
In an interaction with Citi news , Dr Atuahene explained that foreign banks were prudent in their risk assessment as they are doing not have many government contracts, he further attributed their strong corporate governance structures from over the years to their good performance.
“The reason why they [local banks] have lower profitability is that a number of them are financing government contracts while the foreign banks aren’t curious about government loans.”