Indigenous bank, ADB, has recorded a whopping 435% profit for the 2019 financial year. According to its unaudited 2019 Financial Statement, it recorded a profit of GHS35.9 million in 2019 as against GHS5.9 million in 2018.
This impressive performance is primarily due to a reduction in interest expense and investment in government securities. The bank registered an interest expense of GHS182 million in 2019 as against GHS213 million in 2018. This might be due to reduction in cost of funds, from expensive deposits (fixed deposits) to cheap funds (current and savings deposits).
From the income statement, ADB registered GHS11 million tax expense in 2019, compared to GHS28.1 million expense in 2018. It is however unclear why the income tax expense reduced significantly. Per the impressive performance by the bank, the earnings per share rose from GHS3 to GHS11, a significant benefit to shareholders.
From the balance sheet, GHS1.5 billion was invested in securities in 2019 as against GHS1.1 billion in 2018. Deposits from customers also grew by 31% to GHS3.3 billion in 2019. With regard to the financial soundness indicators, the capital adequacy ratio rose from 9.38% in 2018 to 15.11% in 2019.
Non-performing loans however still remained high at 40.24% in 2019 as against 49.29%. Few weeks ago, ADB successfully raised GHS127 million from a private placement. Meanwhile, ADB is trading at GHS5.06 per share on the Ghana Stock Exchange.
Credit: classfmonline.com
