The Ga Rural Bank has bemoaned the high incidence of loan default that the bank is currently faced with, the bank thus, threatened court action against customers who have defaulted on the repayment of loans.
Mr. Fred Tetteh, the Board Chairman of the Bank, has therefore called on the defaulting customers to settle all outstanding debts owed to the Bank and help reverse increasing non-performing loans and overdrafts.
Speaking at the 30th Annual General Meeting (AGM) of the Bank, he indicated that the Bank has accumulated impairment on advances of about GH¢11.5 million with some dating back to 2006.
“We call on all customers including shareholders who are also customers, who have outstanding debts to settle their debts to avoid embarrassment when called upon by the Debt Collectors or face court action.”
Mr. Fred Tetteh
As part of plans to clean the books and reposition the Bank, Mr. Tetteh disclosed that the Bank is engaging the services of two debt-collecting firms to assist management to recover all debts.
In the 2021 financial year, Mr. Tetteh noted that the Bank’s Total Income grew by 20.46 percent to GH¢16, 308,298 from GH¢13,538,672 in 2020. However, he noted that the bank recorded increasing operational costs and huge accumulated impairment on advances. As a result, the Bank registered a Net Loss after Tax of GH¢6,240,829 from a Net Profit after Tax of GH¢240,052 the previous year.
“Our response to this was to revise the negative performance and intensity cost reduction programmes whilst pursuing aggressive recovery of the huge Non-Performing Loans and overdrafts through strategic initiatives in order to return to the journey of profitability.”
Mr. Fred Tetteh
Due to the challenges the Bank was faced with and also in line with the Bank of Ghana directives, Mr. Tetteh said the Bank would not pay dividends to shareholders. Within the year, the Bank, he noted, spent more than GH¢62,000 on various corporate responsibility projects including the construction of a community-based Health Planning and Services (CHPS) compound and support for Farmers’ Day celebration, among others.
The Board Chairman added that the weakening of the Ghana Cedi, anticipated sluggish domestic growth, highly regulated banking and financial landscape, strong competition, and high operational costs, as well as the huge accumulated Non-Performing Loans and Overdrafts, have been identified as the key risk factors affecting the operations of the Bank.
Threats and Opportunities Affecting the Banking Business
Mr. Tetteh asserted that while the Board was closely monitoring the Bank’s performance quarter by quarter to minimize operational costs so as to sustain profit margins, it has also taken into consideration the threats and opportunities affecting the banking business within the next five years and consequentially revised the strategies and initiatives moving forward.
In the years ahead, the chairman said, the Bank would continue on its upward trajectory of ensuring long-term growth and resilience through focused initiatives by exploring new products, prudent cost management and focus on strengthening its core business.
Mr. Tetteh asked the government to make every effort to put in austere monetary and fiscal measures and discipline to arrest the deteriorating local currency, improve revenue collection, and reduce recurrent expenditure whilst pursuing the ongoing policies led by agricultural and industrial sectors to impact positively on the economy.
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