ADB to remove investments in Ghana International Bank, Metro Mass Transport, 2 others

Agricultural Development Bank is planning on removing its investments in four institutions, of which the   Ghana International Bank and Metro Mass Transportation Limited is not an exception.

The bank holds 9%, 10%, 16% and 20% in the Ghana International Bank, Agridev Real Estates Limited, Metro Mass Transportation limited and Activity Venture Finance Company, respectively.

The value of investment in Ghana International Bank Limited as at the time of the directors’ report was estimated at GH¢70,170 which represents 11% of the net of own funds of the Bank (GH¢ 639,224).

This report stated is in breach of section 73(1) of the Banks and Specialised Deposit-taking Institutions Act, 2016 (Act, 930), that states “Bank or Specialised Deposit-taking Institution shall not invest or hold investments in the share capital of a body corporate other than a subsidiary of the bank or specialized deposit-taking institution if the amount of investment exceeds 10% of the net own funds of the bank or specialized deposit-taking institution.”

Also, it is said that all the bank’s investments in non-subsidiary institutions are in breach of section 73(3), and this section 73(3) states that “Bank or Specialised Deposit-taking Institution shall not invest or hold investments in the share capital of a body corporate other than a subsidiary of the bank or specialized deposit-taking institution that represents more than five percent interest in the body corporate”.

The directors’ report said management has engaged the necessary processes to remove these investments accordingly.

It also pointed out that “management has assessed the financial implication of the non-compliance and concluded that it is not material to the financial statements taken as a whole.”

ADB posted profit of ¢65.4 million in 2020

ADB recorded a profit of ¢65.4 million compared to ¢14.9 million in 2019. This constituted over 400% growth in performance in 2020, occasioning a Return on Equity and Return on Assets of 7.69% and 1.14% as against 1.87% and 0.32% respectively in 2019.

The size of the balance sheet experienced a significant growth over the years from ¢4.6 billion in 2019 to ¢5.7billion in 2020 (24%). This strengthened  in part by improved holdings in investment securities  which is in line with its strategic objectives.

The Non-Performing Loan portfolio of the bank saw significant reduction from 41% in 2019 to 34% in 2020.

Its target is to bring the NPL ratio within industry brackets by 2023. Average industry NPL ratio is 17.5%

Deposits grew by 26% from ¢3.4 billion in 2019 to ¢4.2 billion in 2020.

By the end of 2020, the capital adequacy ratio and the Basel Committee inspired capital requirement directive were 16.5% and 14.5% respectively, both above the minimum regulatory.

No dividend payment

Despite recording a substantial profit in 2020, the directors of the bank did not recommend the payment of dividend.

They however consider the state of the bank’s affairs to be satisfactory.

Shareholding structure

The bank now has Financial Investment Trust as its majority shareholder with 64.05%, whilst the Government of Ghana and the Ghana Amalgamated Trust PLC owns 21.50% and 11.26% as the 2^nd and 3^rd majority shareholders.

Together, they control about 96.81% of the bank.