- ADB’s Profit Hits GH¢301.71 million, but 66.32% NPL Ratio Remains Major Risk
Agricultural Development Bank PLC recorded a 6.89% increase in profit after tax to GH¢301.71 million for the nine months ended September 2026, supported by sharply lower credit-impairment charges and a GH¢40 million reversal on investment securities.
Profit before tax rose by 6.94% to GH¢478.53 million from GH¢447.49 million, while reported basic earnings per share increased to 0.18 from 0.17.
The improvement in bottom-line earnings came despite contractions in interest income, net interest income, total revenue and operating income. This makes the quality and sustainability of the profit growth as important as the headline increase.
Interest income declined by 17.19% to GH¢1.23 billion from GH¢1.48 billion. The fall may reflect declining market yields, the composition of interest-earning assets and the contraction in customer lending.
Interest expense also fell significantly, declining by 36.09% to GH¢361.34 million from GH¢565.38 million. The reduction helped protect the bank’s interest spread, but it was insufficient to prevent net interest income from falling by 5.55% to GH¢867.20 million.
The income statement consequently shows a bank benefiting from lower funding costs while simultaneously earning less from its core interest-generating assets.
Net fees and commission income increased by 3.51% to GH¢188.73 million, providing some diversification from interest income. Net trading income rose by 15.57% to GH¢75.50 million, while other operating income more than doubled to GH¢19.22 million from GH¢7.98 million.
However, those gains did not fully offset weaker net interest income. Total revenue declined by 2.95% to GH¢1.13 billion, while operating income fell by 1.97% to GH¢1.15 billion.
ADB’s earnings growth was driven principally by movements in impairment expenses rather than an expansion in its core operating income.
Impairment losses on loans and advances fell by 73.57% to GH¢13.17 million from GH¢49.84 million. The bank also recorded a GH¢40 million impairment reversal on investment securities, compared with no corresponding reversal in September 2025.
Together, these produced a net impairment benefit of GH¢26.83 million in 2026, compared with a net charge of GH¢49.84 million one year earlier. The resulting swing of approximately GH¢76.67 million played a decisive role in lifting profit before tax.
Before impairment movements, personnel costs, other expenses, depreciation and amortisation, operating profit was approximately GH¢451.70 million, down from about GH¢497.33 million in the comparable period.
This indicates that underlying pre-impairment profitability weakened by roughly 9.18%. The increase in reported profit should therefore be read alongside the decline in core income and the exceptional support provided by impairment movements.
Personnel expenses rose by 10.67% to GH¢418.34 million, even as revenue contracted. Other operating expenses declined by 6.46% to GH¢228.49 million, while depreciation and amortisation fell by 3.74% to GH¢52.12 million.
The increase in employee costs placed additional pressure on operating efficiency. For the profit trajectory to remain sustainable, ADB will need to rebuild interest income, expand recurring fee revenue or achieve further cost efficiencies without depending on impairment reversals.
ADB’s total assets increased by 25% to GH¢20.28 billion from GH¢16.22 billion.
The expansion was concentrated in cash rather than customer lending. Cash and bank balances jumped by 67.60% to GH¢10.84 billion, representing more than half of total assets.
Net investment securities stood at GH¢6.38 billion, declining marginally by 1.04%. Cash and investment securities together accounted for approximately 84.91% of the bank’s assets.
By contrast, net loans and advances to customers declined by 10.18% to GH¢2.12 billion from GH¢2.36 billion. Loans represented only about 10.45% of total assets at the end of September 2026.
For a bank established with a development and agricultural financing mandate, the small contribution of loans to total assets raises an important strategic question. High liquidity protects depositors and the balance sheet, but a bank cannot fully perform its intermediation role if most resources remain in cash and securities rather than productive lending.
A cautious lending stance is understandable given the bank’s asset-quality problems. Nevertheless, long-term recovery will require ADB to originate new, performing loans while resolving legacy exposures.
Customer deposits increased by 19.54% to GH¢15.36 billion from GH¢12.85 billion, indicating continued depositor confidence and giving ADB a larger funding base.
However, net loans amounted to only about 13.80% of customer deposits, down from approximately 18.37% in September 2025.
The very low loan-to-deposit relationship demonstrates exceptional liquidity but also signals weak credit deployment. A large deposit base generates interest expense and operational obligations; if it is not deployed profitably, it can dilute returns.
The bank’s liquid ratio increased to 145.83% from 130%, and it recorded no statutory liquidity default during the period.
Cash-flow figures reinforce the liquidity picture. ADB generated GH¢2.56 billion in net operating cash, compared with GH¢1.46 billion in the corresponding period.
Customer deposits contributed a GH¢2.14 billion working-capital inflow. The bank then used GH¢1.32 billion to acquire medium- and long-term government securities, while net repayments of borrowed funds and lease principal totalled approximately GH¢251.07 million.
Cash and cash equivalents consequently increased by GH¢948.89 million during the reporting period, reversing the GH¢708.71 million decline recorded in September 2025.
Borrowed funds nevertheless stood 25.40% higher year on year at GH¢1.67 billion.
ADB’s shareholders’ funds increased by 77.01% to GH¢2.76 billion from GH¢1.56 billion.
The increase was driven mainly by a GH¢850 million deposit for shares received from the Government of Ghana in 2025, accumulated profits and a stronger statutory reserve position.
The government capital injection helped reverse a significant regulatory-capital deficit. ADB said its capital adequacy ratio improved from negative 3.15% in 2024 to 27.17% at the end of 2025.
By September 2026, the capital adequacy ratio had risen further to 27.41%, supported partly by GH¢119.58 million in loan recoveries.
Common Equity Tier One improved to 25.41% from negative 2.51% in September 2025, while the leverage ratio increased to 5.22% from negative 0.62%.
These figures show that the immediate capital crisis has eased. Shareholders approved a private-placement recapitalisation at the bank’s annual general meeting on June 24, 2026, and transaction advisers have been appointed.
Yet the deposit for shares increased to GH¢855.60 million from GH¢23.31 million and had not been converted fully into stated capital by the reporting date. Completing the private placement and clarifying the ownership implications will therefore be important.
ADB also continued to carry accumulated losses of GH¢1.52 billion, although this represented an improvement from GH¢1.70 billion in September 2025.
The bank’s non-performing-loan ratio improved to 66.32% from 70.13%. While the direction is positive, the absolute level remains exceptionally high.
It means roughly two-thirds of ADB’s gross loan portfolio was classified as non-performing at the end of September 2026.
The ratio helps explain the contraction in lending and the accumulation of cash and investment securities. Expanding credit aggressively before resolving existing problem loans could create further capital and impairment pressure.
The GH¢119.58 million recovered during the period is encouraging, but the scale of the NPL ratio shows that the resolution process must go considerably further.
ADB needs a detailed strategy covering recoveries, restructurings, write-offs, collateral enforcement and improvements in credit underwriting. New lending must be directed toward viable borrowers and supported by stronger monitoring to prevent the next generation of problem loans.
The bank also disclosed three other regulatory breaches, compared with one in September 2025. Associated sanctions increased to GH¢386,000 from GH¢120,000. Although the monetary amount is not material relative to the bank’s size, the increase indicates a need for stronger compliance controls.
ADB enters the final quarter of 2026 with a far stronger capital position, abundant liquidity, growing deposits and positive earnings.
Those improvements provide a platform for recovery, but they do not by themselves establish a sustainable banking model.
Revenue and net interest income are declining, the loan book is contracting and the NPL ratio remains dangerously elevated. Profit growth was assisted materially by lower impairments and a reversal on investment securities rather than an expansion in underlying operating performance.
The bank’s immediate priority should be to complete its recapitalisation, accelerate the resolution of problem loans and rebuild a healthy credit portfolio gradually.
ADB must balance prudence with its development mandate. Holding liquidity protects the institution, but the larger purpose of recapitalisation should be to restore its capacity to finance agriculture, businesses and productive economic activity.
The real test of the turnaround will not be the size of its cash balance or capital ratio. It will be whether ADB can convert its renewed financial strength into performing loans, recurring income and sustainable returns without recreating the asset-quality problems that weakened it in the first place.
