GCB Bank unveils comprehensive turnaround plan to revitalize operations

One of the leading banks in Ghana, GCB Bank has held its annual general meeting on Friday, June 30, 2023.

The Managing Director of the bank, Kofi Adomakoh, addressed the bank’s financial performance in 2022 and outlined the challenges faced by the bank and the overall operating environment.

The bank’s financial performance in 2022 reflected the impact of several factors, including the Domestic Debt Exchange Programme (DDEP) initiated by the Ghanaian government.

Under the DDEP, eligible bondholders were invited to exchange their bonds for new ones with lower coupons and longer tenors.

This led to a significant impairment loss on GCB Bank’s investments in government securities, resulting in 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.

Additionally, the bank’s capital adequacy ratio declined to 7.6% by the end of December 2022, below the regulatory limit, indicating a significant drop from 20.9% at the end of December 2021.

While the bank recorded a loss for the year, Adomakoh emphasized the bank’s viability and significant potential for delivering sustainable profit growth and enhanced value to shareholders.

“Despite these setbacks, GCB Bank demonstrated resilience in its operational performance.”

“The bank achieved strong double-digit growth in revenue and pre-provision profit, driven by an expansion of its 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 increased by 11.2% to GHS 2,107.5 million, supported by higher volumes and yields on earning assets.

The bank also focused on growing its retail banking franchise, which accounted for a significant portion of its revenue.

GCB Bank’s retail business continued to expand, serving over 2 million customers through its branch network and digital solutions.

The bank achieved a 28.0% increase in customer deposits, reaching GHS 17,791.4 million, driven by new customer acquisition and retail deposit mobilization campaigns.

While GCB Bank acknowledged the need to address the impact of the DDEP on its capital adequacy, it presented a robust turnaround plan at the meeting.

The plan, as outlined by the Bank’s Managing Director, Kofi Adomakoh includes raising additional equity capital of GHS 1 billion through Common Equity Tier 1 and Additional Tier 1 capital, retention of profits, and revaluation of 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.”

“The bank aims to enhance its revenue generation capacity, implement measures to manage risks effectively, optimize processes to achieve cost savings, and provide innovative digital solutions to its customers. Despite the challenges faced in 2022, GCB Bank is determined to emerge as a stronger and customer-focused bank, leveraging its core strengths and capitalizing,” Mr. Adomakoh added.