The Bank of Ghana has intimated that the sum of all assets held by the Rural Banking sector has increased considerably annually culminating into an improvement in the performance of such banks.
Total assets of Rural and Community Banks (RCBs) increased to GH¢5,674.1 million in the third quarter of 2020 from GH¢ 4,287 million recorded around the same quarter in 2019, depicting a year-on-year upsurge of about 32.4 percent.
“Provisional data from the rural/community banks (RCBs) during the third quarter indicate an improvement compared with the third quarter of 2019,” the Bank of Ghana added.
Also, compared to the previous quarters of 2020, total assets of RCBs lingered around GH¢4,865.8 million in 2020 Q1 and then increased by 5.4 percent to GH¢5,129.2 million in 2020 Q2. Total assets grew further by 10.6 percent to settle at GH¢5,674.1 in 2020 Q3.
By the end of the third quarter of 2020, the proportion of total assets of Rural and Community Banks in the banking system constituted 3.7 percent. This is marginally higher by 0.2 percent compared to RCBs share of assets in the banking sector of 3.5 percent in 2019 Q3 up to 2020 Q2, the Bank of Ghana opined.
A chart of figures detailing the composition of the consolidated assets of Rural and Community Banks saw bills and bonds at the very top of the chart, coming in with GH¢2,286.1 million. Next in line was loans and advances, which came in with GH¢ 1,706.2 million. Cash holdings and balances with banks followed closely behind with GH¢ 951 million, and then other assets comprising about GH¢ 730 million.
According to the Bank of Ghana, a year-on-year analysis of each asset in the total assets of Rural and Community Banks shows that all the assets recorded outstanding growths. Cash holdings and balances with banks topped by 61.7 percent, bills and bonds followed next with 48.5 percent, loan and advances also grew by 14.7 percent, and then other assets, coming last with 8.9 percent.
Similarly, except for other assets which declined by -0.8 percent quarterly, there were growths recorded quarter-on-quarter for all the main assets. Again, cash holdings and balances with banks recorded the highest growth of 15.9 percent, bills and bonds also followed suit with 12.8 percent, loan and advances came in with 10.6 percent.
Overall, total assets of Rural and Community Banks improved in 2020 Q3 but contributed to less than 4 percent of total assets in the banking system. This is indicative of the fact that there is more room for growth in RCBs to enable them to assist with the government’s initiative of increasing financial inclusion by 27 percent in 2023.
With the establishment of an effective risk management system and corporate governance directive by the Bank of Ghana for RCBs last year, this is likely to improve their profitability and sustainability to meet their financial and social goals in the near term.