As a result, commercial banks also bear greater responsibility to their customers in earning interests on such deposits.

The latest banking sector report by the Bank of Ghana shows that deposits accounted for 62.5 percent of the banking industry’s assets as at December 2017.

According to the central bank’s data, total deposits went up by some 6.67 billion cedis between December 2016 and the same period last year.

For the twelve months period, total amounts deposited with all banks amounted to 58.28 billion cedis.

This is up from the 51.66 billion cedis recorded in December of the preceding year.

84.2 percent of all deposits came in as domestic currency while the remaining 15.8 percent came in foreign currency.

Borrowings by commercial banks also came in as the second source of funding for commercial banks accounting for about 16 billion cedis of the funding needs of the banks.

By this, commercial banks were able to raise money for their operations from short and long term instruments.

Although income from loans to customers dropped between December 2016 and the same period last year (46.4 percent in December 2017, from 50.7 percent in December 2016), it perhaps still leads as income generating source for banks.

A situation, the central bank attributed to the drop in lending rates as well as the rising Non Performing Loans.

Meanwhile, the share of income from investments (both short and long term) increased from 33.5 percent in December 2016 to 38.0 percent in 2017, justifying the shifts in banks’ portfolio preferences despite declining money market rates.

Also, the money that the banking industry made from fees and commissions such as ATM card use dropped from 10.6 to 10.2 percent between the twelve month period.

While ‘other’ income, recorded a marginal increase from 5.2 percent to 5.5 percent during the period under review.

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By: Pius Amihere Eduku/citibusinessnews.com/Ghana

The post Deposits still major source of funds for banks – BoG report appeared first on Citi 97.3 FM - Relevant Radio. Always.

According to the Bank of Ghana, the businesses constituted 80.6 percent of loan default attributable to the private sector for last year compared to the estimated 7.9 percent of loan default attributable to the private sector recorded by foreign businesses.

This is among the key findings of the Banking sector report for January this year.

The report catalogued operations in the banking industry as at December 2017.

Between December 2016 and the same period last year, the total loans that banks offered to their customers increased from 35.4 to 37.66 billion cedis.

The Bank of Ghana’s report also put the banking sector’s non-performing loans (NPLs) at 8.58 billion cedis as at the end of last year compared to the 6.14 billion cedis recorded in the preceding year.

Even though loan disbursements to both indigenous and foreign private sector businesses went up for the period, the local private businesses defaulted most in terms of repaying the loans.

Of the ninety-four percent loan default attributable to the private sector, indigenous private enterprises accounted for as much as 80.6 percent of total NPLs in December 2017 compared with a share of 78.9 percent in 2016.

Their foreign counterparts on the other hand, managed to bring their percentage of loan default down to 7.9 percent from 13.2 percent in the preceding year.

Meanwhile the public sector’s contribution to the industry’s NPLs increased from 3.2 percent in December 2016 to 5.7 percent in December 2017.

It is however not certain, what factors accounted for the inability of local businesses to repay for loans contracted from banks.

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By: Pius Amihere Eduku/citibusinessnews.com/Ghana

The post Local businesses worst loan defaulters in 2017 – BoG report appeared first on Citi 97.3 FM - Relevant Radio. Always.

When I moved out of Ghana to US and Canada, one thing that I have seen separate Ghana from those two countries is that the little things matter.

Sometimes we blame other people for the state of affairs of our country, but I think 99% of our problems are self-inflicted.

If you are a bank in Ghana, make no mistake you are competing with other countries for capital and interbank dealings, an investor & treasurer will most likely chose a bank that was on time to publish its Financial Statement.

March 29, 2018 was the deadline according to subsection 2b of section 90 of the Banks and Specialized-deposit taking Institutions, Act 2016 (Act 930) for all Banks in Ghana to publish their full financial statements (FS) and not the condensed FS on their websites.

At end of the day, only 2 banks had so far done the right thing: Societe General Ghana & CalBank.

What surprises me is that the head-office of 13 foreign controlled Banks have published their group annual FS.

With this attitude, how can a bank from Ghana raise bonds outside, I do hear Nigeria Banks raising Eurobonds etc. but I have not heard of such story about banks from Ghana raise any Eurobonds.

So my questions are as follows;

1. When will banks in Ghana start doing the right thing when it comes to timely publication of FS on website?
2. Same thing happened in 2016 and I am not aware of BoG penalty on Banks, so when will Bank of Ghana start doing the right thing by applying subsection 3 of section 90 of Act 930?
3. When will Securities and Exchange Commission of Ghana and Ghana stock exchange start doing the right thing by ensuring that  listed banks like Ecobank, Access, ADB, SCB, HFC and GCB publishes their full FS by deadline date?
4. Have BoG received all FS and long form reports of all banks?
5. When will some auditors in Ghana stop treating financial statements as if it is their financial statements and focus on ‘must have’ and instead of focusing on ‘Nice to have’.

Honestly, I don’t see the issue we have in Ghana, it is simple, you agree your FS notes and everything with auditors before December and auditors also audit 11 months up to December and come January, it is just the numbers.

Here in Canada, aside from other roles I play in Bank, I lead a reporting team as well, we have October year end, by November we are done with everything and December first week we then publish the FS.

Act 930

90. (1) A bank or specialised deposit-taking institution shall exhibit at each of its branches or agencies in a conspicuous place throughout the year, a copy of the last audited financial statement in respect of the operations of the bank or specialised deposit-taking  institution.

(2)          A bank or specialised deposit-taking institution shall

(a)          In the case of a bank not later than three months after the end of its financial  year; or

(b)          In the case of a specialised deposit-taking institution not later than four months after the end of each financial year,

furnish the Bank of Ghana with a copy of its audited financial statements together with the auditor’s statutory and long form audit reports; and cause the financial statements together with the auditors’ reports to be published on its website if any and in at least two daily newspapers of national circulation.

(3)          A bank or specialised deposit-taking institution which fails to comply with this section is liable to pay to the Bank of Ghana, an administrative penalty of not more than one thousand penalty units.

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Author: Emmanuel Akrong

Credit Consultant

The post 32 banks fail to comply with financial statement publication rules (Article) appeared first on Citi 97.3 FM - Relevant Radio. Always.

The Bank’s optimism is premised on its performance for last year (2017) where it recorded a profit after tax of 386.17 million cedis.

The Finance Director at Barclays Bank Ghana, Antoinette Kwofie disclosed this plan when she engaged journalists to explain the reasons accounting for the bank’s performance in 2017 on Thursday, March 29, 20180.

A year-on-year comparison of Barclay’s Bank’s financial results shows that between 2016 and 2017, Barclays bank’s profit went up by about 82 million cedis from the 304.53 million cedis recorded in 2016.

In 2017 also, the bank’s income such as interests on loans, as well as fees and commissions charged for use of ATMs for instance, went up 887.29 million cedis in 2017.

Equally, the bank spent a bit more on its expenditure including income taxes as well as personnel expenses in 2017.

Total expenses amounted to 337 million cedis in 2017 against the 291.79 million cedis recorded in the preceding year (2016).

Speaking to Citi Business News on the performance, the Finance Director at Barclays Bank Ghana, Antoinette Kwofie attributed the profitability to improved efficiency.

“This year you will see growth of 12.7 percent; between 2015 and 2016, you see a higher year on year growth compared to this figure. So the operational efficiency that we are putting in place to deliver better value to the customers and also to keep our cost within manageable range, is what is leading to the declining growth,” she stated.

Also, weighing Barclays Bank’s assets against its liability, which is the capital adequacy ratio, stood at 20.45 percent against 19.04 percent in 2016.

Meanwhile the Non-Performing Loan ratio stood at 13.6 percent compared to 19.17 percent.

Antoinette Kwofie also believes Barclays should sustain its strong performance and contribute to the new Africa Group brand, ABSA, later this year.

“Actually Ghana is one of the top three businesses outside of South Africa in the ABSA Group. In actual fact, of all the countries outside of South Africa, we were the most profitable in the group,” she added.

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By: Pius Amihere Eduku/citibusinessnews.com/Ghana

The post Barclays Bank Ghana posts GH¢386m in profits in 2017 appeared first on Citi 97.3 FM - Relevant Radio. Always.

The action came after the company persistently failed to comply with demand notices served on it.

The Reverend John Yaw Boabeng, Chief Revenue Officer in charge of the Recovery, Debt Management and Enforcement Unit, said the company had 10 working days to make a satisfactory payment arrangement with the GRA and anything short of that would result in legal action to recover the amount owed.

The tax liability represents value added tax (VAT), company income and withholding taxes for the period of 2013 to 2016.

The Rev Boabeng said enough time was given to the defaulting company to settle the amount but it would not take advantage of that.

“The audit has long been completed; the taxpayer has been given the opportunity severally to pay.

We served him a notice of tax liability, another notice and then final demand notice and he would still not respond.”

The GRA, therefore, had no option but to close the offices.

He reminded tax defaulters that the more they delayed in making the payment, the higher the penalty.

“Of all the taxes computed – company income tax, VAT, and the withholding taxes, once there is a delay in payment, there will be interest and penalty”.

He noted that Africa Central Cargo had not shown the commitment to settling its liability.

He called on those who had defaulted in their tax payments to take steps to arrange to settle their tax liabilities or be prepared to face appropriate sanctions.

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Source: GNA

The post GRA closes down company office over GH¢2.3 million unpaid tax appeared first on Citi 97.3 FM - Relevant Radio. Always.

Also, the central bank has directed the full disclosure of conflict of interest guidelines by such institutions to tame adverse impacts of delayed loan repayments.

The rules are part of new corporate governance directives issued by the Bank of Ghana to sanitise the financial sector.

Undoubtedly, the directive comes on the back of recent developments in the banking sector where directors and CEOs have been cited for not abiding by standard corporate governance rules.

To stop the issuing of unchecked loans to interested parties of directors of banks for instance, the Bank of Ghana wants such Directors to disclose to their boards, their professional, investment and any other interest in proposed credit facilities to be disbursed at any given period of time.

Portions of section 20 of the Banking Business- Corporate Governance Directive 2018 read,

“A person, before assuming office as a director or key management personnel of a regulated financial institution, to declare to the board of directors of that regulated financial institution and the Bank of Ghana; 

1. a) the professional interests of that person or the office that person holds as manager, director, trustee or by any other designation; and
2. b) the investment or business interests of that person in a firm, company or institution as a significant shareholder, director, partner, proprietor or guarantor, with a view to prevent a conflict of interest with the duties or interests of that person as a director, or key management personnel of the regulated financial institution.”

Similarly, the board of a financial institution shall ensure that transactions with related parties (including internal group transactions) are reviewed.

This is among others to assess risk and apply the appropriate restrictions like enforcing non preferential terms that guide the exposure limits for loans to related parties and staff.

“The board shall ensure that transactions with related parties (including internal group transactions) are reviewed to assess risk and are subject to appropriate restrictions (e.g., by requiring that such transactions be conducted on non preferential terms/basis) and applicable legislation and other requirements such as those prescribed under sections 67 to 70 of Act 930 regarding exposure limits for loans to related parties and staff,” a portion of the Directive stated.

In addition, a regulated financial institution is expected to seek prior written approval of the Bank of Ghana before it appoints a CEO or Deputy CEO.

Moreover, the Bank of Ghana’s directive is asking all banks to as a matter of compliance, have formal written conflicts of interest policy and an objective compliance process for implementing the policy.

Among others, the conflict of interest policy shall include; the duty of the director to avoid possible activities that could create conflicts of interest.

Also, a review or approval process for directors to follow before they engage in certain activity so as to ensure that such activity will not create a conflict of interest.

And, the duty of the director to disclose in addition to section 59 of the Act, any matter that may result, or has already resulted in a conflict of interest.

72. The board should have formal written conflicts of interest policy and an objective compliance process for implementing the policy. The policy should at the minimum include;

a) the duty of the director to avoid possible activities that could create conflicts of interest;

b) a review or approval process for directors to follow before they engage in certain activity so as to ensure that such activity will not create a conflict of interest;

c) the duty of the director to disclose in addition to section 59 of the Act, any matter that may result, or has already resulted in a conflict of interest; 

d) the responsibility of the director to abstain from voting as prescribed under section 59 of the Act and on any matter where the director may have conflict of interest;

e) adequate procedures for transactions with related parties to be made on a non-preferential basis; and

f) the way in which the board will deal with any non-compliance with the policy.

 (ii) The board shall ensure that appropriate public disclosure is made in the annual accounts and information relating to the policies of the regulated financial institution on conflict of interest and potential material conflicts of interest as provided to the Bank of Ghana on quarterly basis.

(iii) The Board shall maintain an up-to-date register for documenting and managing conflict of interest situations in the regulated financial institution.

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By: Pius Amihere Eduku/citibusinessnews.com/Ghana

The post BoG stops unwarranted loans to ‘cronies’ with new corporate rules appeared first on Citi 97.3 FM - Relevant Radio. Always.

The central bank on Monday, March 26, 2018 announced that it has reduced the policy rate by 200 basis points after concluding its Monetary Policy Committee (MPC) meetings for the quarter.

The Governor of the Bank of Ghana, Dr. Ernest Addison among others mentioned that the decision was arrived at following indications that other variables point to the central bank’s ability to meet the annual inflation target.

But some industry players that Citi Business News has been speaking to have expressed diverse thoughts on the impact of the reduction.

For the Head of the Economics Department of the University of Ghana, Prof. Peter Quartey, the reduction has been anticipated.

He believes it should propel growth of private sector businesses.

“We can also see that the exchange rate has been stable and then inflation has inched up slightly with expectations not likely to increase. So based on all of these and then also in line with government policy of providing cheaper access to credit to grow the private sector, I think a decline in the policy rate is more than welcome. It is however my hope that the banks or the money market will responds positively by also reducing their lending rates.”

Another Economist with GN Research, Emmanuel Zewu however described the 200 basis point as being a little on the high side.

Though he admits to the need for a reduction, he stressed that the cedi’s relative depreciation against some international currencies.

“If you look at it, even though the cedi has been stable especially when it comes to the dollar rate , the other major currencies especially the Pound and the Euro are not performing too well; then you combine that with increasing petroleum prices on the international market essentially, there will be inflationary powers going forward. So I was thinking the monetary policy committee will be more conscious or cautiously reduce the monetary policy rate but the 200 basis points reduction is more or less on the high side for me,” he explained.

Meanwhile the CEO of the Private Enterprise Federation, Nana Osei Bonsu says the business will be comfortable only when commercial banks let it reflect in their interest rates.

“What we will want to see is that this policy rate has a direct correlation, a direct impact so when it is reduced by 200 basis points we want that to reflect in the interest rates that will be charged by the universal banks, we want to see the 200 basis points or at least 150 basis points in that regard,’ he stated.

Nana Osei Bonsu added, “So what we need is a formula that allows the banks to calculate their base rates that allows the risk premium. So if the Bank of Ghana can use its authority to make a meaningful impact on the interest rates, it should have another formula that will allow the impact of the policy rate to be direct so that it will reflect in a reduction of interest rates.”

For 2017 alone, the Bank of Ghana reduced the policy rate by 550 basis points.

The figure dropped from 25.5% to 20%.

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By: Pius Amihere Eduku & Anita Arthur/citibusinessnews.com/Ghana

The post Mixed reactions meet BoG’s cut in policy rate appeared first on Citi 97.3 FM - Relevant Radio. Always.

This represents a 200 basis points reduction in the policy rate which was at 20 percent.

Today’s announcement of a reduction is the first after the rate was maintained earlier in the year.

The policy rate is the rate at which the central bank lends to commercial banks for onward lending to their customers.

The Governor of the Bank of Ghana, Dr. Ernest Addison speaking at a press conference noted that the decision to reduce the rate was based on the central bank’s moves to achieve the annual inflation target.

According to him, the Monetary Policy Committee (MPC) decided to reduce the policy rate to also help ease the burden of interest payments on the budget.

“The Committee noted that the current inflation forecast provides scope for monetary policy to realign interest rates, translate the disinflation gains achieved so far to the market, and reinforce the fiscal consolidation process by easing the burden of interest payments on the budget. Under these circumstances, the Committee decided to reduce the monetary policy rate by 200 basis points to 18.0 percent”.

Dr. Addision explained that the disinflation process firmed up over the first two months of the year, with significant moderation in price pressures.

He stated that both headline and core inflation broadly trended down, alongside easing inflation expectations, an indication that the disinflation process remains well-anchored.

“Our latest forecast suggests that the medium-term inflation target of 8±2 percent is within the forecast horizon and we are on course to meeting the inflation target band,” he assured.

He made the disclosure when he addressed the media on Monday morning.

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By: Lawrence Segbefia/citibusinessnews.com/Ghana

The post BoG reduces policy rate to 18% appeared first on Citi 97.3 FM - Relevant Radio. Always.

A statement from the company said the operations of McOttley Capital remains stable, adding that, it shall continue to offer exciting tailored-made products and services to its clients, guided by its values of excellence, integrity and professionalism.

“At McOttley Capital Limited, the interest of the customer is our ultimate goal and we seek to serve them ethically in a sound professional manner. We are not here to compete but to create a niche for ourselves in the industry as leaders and not learners,” it added.

The statement came against the backdrop of a recent media report regarding McOttley Money Lending Limited, which is one of the subsidiaries of McOttley Holdings Limited of which McOttley Capital Limited is part of.

The statement said McOttley Capital Limited is an entirely separate entity governed by a separate and independent Board and management.

It continued: “McOttley Capital is licensed and regulated by Securities and Exchange Commission of Ghana, whereas McOttley Money Lending limited is licensed and regulated by Bank of Ghana with separate Board and management.”

The statement advices the general public to disregard rumours, innuendoes and false statements that are being spread by mischievous elements both in the traditional and social media.

The statement further assured the public that the Group Executives at McOttley Holdings are working assiduously to resolve the specific issues relating to McOttley Money Lending Limited.

McOttley Holdings was adjudged the Best New Investment Bank in Ghana for 2015 by BIZ Switzerland, whiles its subsidiary, McOttley Capital, was adjudged the Best Customer Service Investment Bank in Ghana for 2015 by IFM London.  McOttley Capital was in 2016 ranked No.13 on the 16^th edition of the Ghana Club 100 list.

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Credit: McOttley Holdings

The post Mcottley Capital Assures Ghanaians of Exciting Products & Services appeared first on Citi 97.3 FM - Relevant Radio. Always.

According to him, the high cost of the project is already throwing government’s budget out of gear.

“For me I’m looking at the figures…Out of GHc240 million that was going into the ABFA [Annual Budget Funding Amount] to be used for good and services, GHc211.11 million went into the free SHS…So is that which is causing some of the misalignment in the budget,” he added.

Speaking on the Citi Breakfast Show on Monday, March 26, 2018, Mr. Terkper warned that other critical sectors of the economy, such as health, risks being cash starved if allocation meant for them are diverted to finance the Free Senior High School project.

[contextly_sidebar id=”FhgPKucoNfwxb1jIQHb3RIPXTjZYTuGp”]“Free SHS helps a lot of poor people, no question about that. But what is the cost? We have taken a lot more of our oil revenue there. We said we will raise revenue for Free SHS, now we are using the traditional sources of revenue,” he stated.

He recalled that all the measures government outlined to sustain the project have not materialized.

Mr. Terkper pointed out for example that government promised to set a special fund to support the project but it yet to be done.

“We said that we would create an education fund for the Free SHS.  What is the status of that fund? We have capped statutory funds and others and we are using it”.

He warned that capping some statutory funds is already affecting other areas of the economy which also urgently need funding.

“We are seeing a misalignment of the budget. We have to start putting things together. Ministers are out there saying their allocations are not adequate. Where is the money going at a time that we are getting more oil from the TEN fields and Sankofa field?”.

Mr. Terkper observed that there must be a new approach to save the program from collapsing since government has not put in place a long term policy to sustain it.

Click below for the full interview on the Citi Breakfast Show:

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By: Lawrence Segbefia/citibusinessnews.com/Ghana

The post Free SHS has thrown budget out of gear – Terkper appeared first on Citi 97.3 FM - Relevant Radio. Always.