As a result of the recent attacks on bullion vans and killings of security personnel, the ARB Apex Bank is seeking a concessionary loan from the Bank of Ghana (BoG) for the procurement of customised armoured bullion vans to ensure the security of personnel and our cash-in-transit (CIT) management.

Taking the lead in that direction, the bank has purchased three of the vehicles from its internal resources.

A Bank of Ghana loan will also help purchase an additional eight vehicles to augment the fleet of bullion vehicles across the country. 

The three purchased would be stationed in Accra, Kumasi, and Takoradi.

The rest are expected to be delivered by the end of the year, barring no delays with permit approvals from the Ministry of the Interior.  

The decision follows a BoG directive for all banks operating in the country to phase out, the current soft body bullion vans.

The Managing Director of the bank, Alex Kwasi Awuah, made this known at the 20th annual general meeting in Kumasi on Saturday.

It was the first in-person convocation since the COVID-19 pandemic broke. The 18th edition was held virtually while the last edition was a hybrid of in-person and virtual.

Net interest

The negative effects of COVID-19 notwithstanding, the MD said the bank’s net interest income grew from almost GHS60 million in the year 2020 to GHS65.71 million in 2021, representing a growth of about 10 per cent.

The total operating income also upended the previous year’s and grew from GHS75.27 million to GHS78.17 million, representing about four per cent.  

Setback

The major setback for the bank however was a slump in the profit after tax of GHS3.81 million in the previous year to a loss of GHS3.56 million in 2021.

The MD said the dip which represented a jolt to the bank's operations was, however, attributable to its provisioning for the liquidity support given to some ailing Rural and Community Banks (RCBs). 

Review of supports

Mr Awuah said currently, the bank was reviewing its future support for struggling RCBs to ensure that it did not bring the inefficiencies of non-performing banks on well-performing members, especially because its intention was to work hard so that ARB Apex Bank could return good profits and be able to pay dividends to its shareholders in the nearest future.  

Challenges

He reckoned that one of the major challenges facing the RCB sub-sector was the low liquidity and the lack of competitively priced loans for on-lending to member banks.

The bank said it was fully aware of how grants and cheap funds could help in the financial intermediation efforts and rural financial inclusion agenda of the country.

Other interests

Mr Awuah announced three pursuits that the bank had commenced that were almost yielding results.

The first is a US$40 million co-financing facility from the International Fund for Agricultural Development (IFAD), for which IFAD had secured funding from the Green Climate Fund to be disbursed at affordable interest rates to smallholder farmers.

He said it was is to encourage adaptation and climate mitigation practices.

Under the arrangement, the bank was required to provide a co-financing support of US$2.5 million.  

The second according to the MD was a US$10 million facility from the ECOWAS Bank for International Development (EBID), on which work had progressed very fast.

He said the bank had submitted the required documentation and awaiting possible disbursement of the facility by December this year.  

And additionally, it had signed a Memorandum of Understanding (MoU) with the Ministry of Finance to access a US$4 million funding facility from the African Development Bank (AfDB) to lend at concessionary rates to support RCBs’ clients under the Social Investment Fund (SIF) umbrella.

Global economy

The Chairman of the Board of Directors of the ARB Apex Bank, Dr. Anthony Kwesi Aubynn, said developments in the global economy showed a steady economic recovery from the pandemic effects since the last quarter of 2021.

He mentioned that there remained profound uncertainty and fragility in the world economy, which has been exacerbated by the geopolitical developments in Europe that had led to the Russia-Ukraine War.

"These challenges are expected to weigh on global growth in the near term. The updated World Economic Outlook report by the IMF projects a decline in global growth from 5.9 per cent in 2021 to 4.4 per cent in 2022," he said.

Performance

Dr. Aubynn said the performance of the banking sector in 2021 pointed to sustained growth in assets, deposits, and investments alongside improvements in the financial soundness indicators.

Presenting his report, he said in the year under review, total assets of the bank grew by 20.4 per cent to GH¢179.8 billion as at December 2021.

Asset quality, however, continued to reflect the general pandemic-induced repayment challenges as well as some bank-specific loan recovery challenges.

"From the peak of 17.3 per cent in August 2021, the NPL ratio eased further to 15.2 per cent at end-December 2021. Comparatively, the NPL ratio was 14.8 per cent in December 2020.

"The industry remained solvent with the average industry CAR of 19.6 per cent well above the 11.5 per cent regulatory minimum threshold. Core liquid assets to short-term liabilities was 25.9 per cent in December 2021 compared with 27.8 percent a year ago".

Locked up funds

Dr. Aubynn said as reported last year, rural banks still have significant amounts of money locked up with some Securities and Exchange Commission (SEC) regulated institutions, a situation which continues to have a great toll on the industry.

He assured that the ARB Apex Bank will continue to engage the regulators to salvage as much of the funds as possible, to improve the liquidity position of the industry.  

Capital 

He said the bank’s paid-up capital remained at GH¢9.2 million as at December 2021, which was woefully inadequate for the smooth operations of the bank due to single obligor limits.  

According to him, the new strategy of the bank was to raise at least GHS5 million annually from the RCBs for the next five years to boost the capital base of the Bank.