From Francis Owusu-Ansah, Nkoranza
The General Manager of Fiagya Rural Bank in Nkoranza North in the Bono East Region, Mr. Kwame Baffo-Emmim, has given an assurance that the bank is robust enough to withstand all pressures in the midst of the banking sector clean up.
Addressing the 34th Annual General Meeting of shareholders of the bank at the Busunya Methodist Church, Mr Baffo-Emmim said: “The Fiagya Rural Bank is very strong in terms of cash and assets, and nothing can shake our foundation.”
He pointed out that of the 144 rural banks in the country the Fiagya Rural Bank was well grounded to assist all clients, especially farmers, to grow their businesses.
According to Mr Baffo-Emmim, during the year under review, the bank extended loans and overdrafts facilities amounting to GH¢9,165,154 to 48,260 customers, representing an increase of 31.92 percent over that of the 2017 figure.
He said that even though the bank continues to grant a lot of support to a large number of customers in its operational areas, most of the beneficiaries continue to default in loan repayments. He, therefore, urged loan beneficiaries to repay their loans on time to enable others benefit from the facility.
The Board Chairman of the Fiagya Rural Bank, Prof. Nsiah Gyabaah, reported that during the year under review, Ghana’s economy advanced 6.8 percent year-on-year in the fourth quarter of 2018, slowing from a 7.4 percent expansion in the previous period.
Prof. Nsiah explained to shareholders that the interest rate of the 91 and 182 days government Treasury Bills increased from 13.35 percent and 13.88 percent, to 14.59 percent and 15.03 in 2017 and 2018 respectively.
According to him, inflation was further reduced to 9.84 percent in 2018, as compared to 12.37 percent in 2017.
The Board Chairman said the Bank of Ghana also reduced the prime rate from 20 percent to 16 percent in 2018. He said that the Bank of Ghana had revoked the licenses of 386 insolvent Microfinance and Microcredit companies.
Prof Nsiah Gyabaah added: “The revocation of licenses of these institutions is to get rid of insolvent and dormant institutions that have no reasonable prospects of rehabilitation and have denied depositors access to their deposits.”
The Fiagya Rural Bank has taken steps to clean its books off non-performing or toxic assets to help sustain its operations.
The bank has set its system right to ensure efficient management of liquidity, avoid unhealthy fixed deposit rates, and make prudent short-term investments by avoiding trading in high earning securities which are associated with colossal risks.
The move is targeting firm operational sustainability, rather than huge profitability in the short-term.
The bank, for instance, is making short-term investments of GH¢5.8 million in 2019. Though the government’s Treasury Bill rate currently remains unattractive, a greater proportion of the bank’s investment is going into it.
The bank closed 2018 with total assets of GH¢28 million, and is expected to increase its assets base to about GH¢30 million by the end of 2019, representing a 30% projected growth.
On the backdrop of these strategic steps, the bank is, therefore, pointing at a significant increase of performing assets as against bad ones.
Mr. Baffo-Emmim said the projection was informed by the trend over the last three years, stressing: “We are very optimistic of meeting this target; meeting most of our growth projections has been consistent in recent years.”
Loans remain the main asset of the bank, but like many other banks, non-performing loans have been a bane to liquidity. The situation is largely because of poor loan appraisals and failure of businesses to repay loans on schedule.
To improve upon its liquidity, the General Manager said, the bank was now giving out ‘quality loans’ so as to recover them on time.
He noted that the bulk of the bank’s 2019 loan portfolio was being channeled into microfinance rather than commercial loans to only a few individual businesses – which have proven to be more risky in recent times.
The loan budget for 2019 is GH¢11 million as compared to GH¢8 million in the preceding year. Its microfinance scheme will take 35%, trade and overdraft 25%, agriculture 15%, government salary workers 15%, and 10% for other loans.
To be able to secure more funds for disbursement, the bank has redoubled its efforts in mopping up deposits. It has engaged the services of more mobile bankers, which have been given strategies to achieve certain targets.
Already, the bank has relocated its Techiman and Sunyani branches to more commercially-viable places. This is expected to help consolidate the bank’s deposit gains in 2019.
It has budgeted to increase total deposits of 2018, GH¢15 million, by 30% to reach about GH¢19.5 million.
Mr. Baffo-Emmim revealed that the bank has estimated to generate a profit of about GH¢570,000 by end of the year. The bank realised a profit of GH¢335,000 in 2018, but is optimistic of generating more by close of this year.
As at the beginning of this year, the share capital of the bank stood at a little over GH¢1 million, and has set a target of increasing it to, at least, GH¢1.5 million by close of December 2019.