The government of Ghana’s Domestic Debt Exchange Programme (DDEP) has exacerbated the already fragile situation faced by many rural and community banks (RCBs) in the country, according to Chairman of the Board of Directors of ARB Apex Bank, Dr. Tony Aubynn.
RCBs were already grappling with the severe consequences of funds that had been locked up in certain financial institutions regulated by the Securities and Exchange Commission, and the introduction of the domestic debt exchange has further compounded their challenges.
Dr. Tony Aubynn made these observations during the commencement of the 21st annual general meeting of the ARB Apex Bank.
Dr. Aubynn noted that rural and community banks had substantial investments in government-related bonds, which were converted into new holdings as part of the debt exchange program. However, he expressed the commitment of the ARB Apex Bank to actively engage with the government and regulatory authorities to find solutions and alleviate the situation, ultimately aiming to enhance and sustain the rural banking sector.
Dr. Aubynn highlighted that the rural banking sub-sector demonstrated significant improvements in the past year:
- Profit before tax surged by 44.6 percent, rising from GH¢113.3 million in 2021 to GH¢164.0 million by December 2022.
- Total assets experienced year-on-year growth of 25.6 percent, expanding from GH¢6.7 billion to GH₵8.4 billion by the end of December 2022.
- Deposits also saw a substantial increase of 25.4 percent, climbing from GH₵5.9 billion in December 2021 to GH₵7.4 billion.
- Loans and advances recorded an 18.2 percent uptick, advancing from GH₵2.2 billion to GH₵2.6 billion in 2022.
Dr. Aubynn mentioned that Rural and Community Banks (RCBs) had approved the Apex bank’s strategy to raise an additional GH₵25.0 million in capital over five years, with an annual increment of GH₵5.0 million. This capital injection aims to strengthen the bank’s capital base and alleviate operational constraints. Consequently, the bank’s paid-up capital increased from GH₵9.6 million as of December 2022 to GH₵10.9 million by June 2023.
He assured shareholders that the bank would distribute dividends once the restrictions associated with the debt exchange program were eased.
Mr. Alex Kwasi Awuah, Managing Director of ARB Apex Bank, reported that the eagerly awaited Financial Sector Development Project (FSDP), which includes the implementation of mobile agency and internet banking solutions, was making significant progress. He added that the internet banking application was expected to be ready by the fourth quarter of 2024, promising enhanced banking convenience for customers and a positive transformation in the fortunes of RCBs.
He encouraged shareholders and customers to remain loyal, as better prospects were on the horizon.