2nd DDEP: GCB anticipates minimal impairment impact on its books
GCB Bank, during its 29th annual general meeting held on Friday, June 30, 2023, said it expects to be marginally impacted by the second round of the domestic debt restructuring programme.
According to the Board of Directors, the bank had exposure to local dollar bonds (GHS 6.9bn), which were recently agreed upon to be restructured by the government and banks. However, GCB had already taken into account the impact on its books with minimal impairments expected on the bank.
The Board however, admitted it was surprised by the Government’s decision to restructure cocoa bills (GHS 8.1bn), nonetheless, the impact on its finances remains insignificant, representing less than 10% of the bank’s impairment losses recorded in 2022.
Speaking to norvanreports, GCB’s CEO, John Adomakoh, emphasized that the bank had anticipated the second round of the debt restructuring and had made provisions for the expected impairments.
For the 2022 review year, no dividends were paid to shareholders of the Bank following a directive from the Bank of Ghana (BoG) to suspend dividend payments due to the impact of the Domestic Debt Exchange Programme (DDEP).
Looking ahead, GCB Bank has ambitious plans to bolster its Capital Adequacy Ratio (CAR) from the current 7.59% to 14% by the end of the year. To achieve this, the bank aims to mobilize an additional GHS 1 billion in equity capital from its shareholders.
The proposed equity capital infusion consists of GHS 750 million in Common Equity Tier 1 Capital and GHS 250 million in additional Tier 1 Capital in the form of preference shares.
This capital injection serves multiple purposes, including meeting regulatory capital adequacy ratio requirements, enhancing the bank’s deal-making capacity, taking advantage of available opportunities while preserving its core strengths, strengthening access to funding markets, and instilling confidence in GCB Bank.
Moreover, the additional capital will facilitate targeted and prioritized investments in digital transformation, ultimately aligning with the bank’s overarching business strategy.
GCB Bank’s proactive approach to managing the impact of debt restructuring and its focus on fortifying its Capital Adequacy Ratio exemplify the institution’s commitment to financial resilience, regulatory compliance, and positioning itself for sustained growth in an evolving banking landscape.
Market participants and stakeholders will closely monitor the bank’s progress as it executes its strategic plans and solidifies its position in Ghana’s banking sector.
