Bank of Africa beats industry peers with record 140% liquid funds over total deposits – PwC
With a record high liquid funds of over 140% to total deposits, Bank of Africa (BoA) Ghana has been adjudged the bank with the most liquid funds over total deposits by audit firm, PricewaterhouseCoopers (PwC).
Liquid funds are debt funds that invest in short-term assets such as treasury bills, other government securities, commercial papers, certificate of deposits, among others.
In its 2022 Ghana Banking Sector Survey Report, PwC notes BoA Ghana is ahead of the industry’s average liquid funds by 47 percentage points (47%), attributing the record growth in the bank’s liquid funds to increase in its government securities holdings from GHS 783m in 2020 to GHS 1.5bb in 2021.
According to the report, the bank’s liquid funds stood at GHS 2.1bn in 2021 as against the GHS 1.1bn liquid funds held by the bank in the previous year.
“The source of growth in BoA’s liquid assets is supported by the relative increased short-term borrowings of 424% from GHS 169m in 2020 to GHS 887m in 2021,” said PwC.
In third place is ABSA Bank, the bank’s ratio of total liquid funds to total deposits indicates a 14% rise from the prior year’s results. Total liquid funds increased by 27%, from GHS 7 billion in 2020 to GHS 9.6 billion in 2021, with a 20% increase in total deposit from GHS 6.9 billion in 2020.
FBN Bank maintained a very strong liquidity position relative to deposits. Although there is a continuous downward trend from its record high in 2018 of 281%, the bank’s ratio of liquid funds to total deposit has been well above the sector’s average for 5 years consecutively.
In 2021, the bank shedded only 2% of its 116% results in 2020. This marginal dip is explained by the slight growth in total deposits from GHS 1.22 billion in 2020 to GHS 1.23 billion in 2021 as total liquid assets on the other hand improved marginally by 4% from prior year’s liquid assets of GHS 930 million.
Agricultural Bank Ghana and CAL Bank experienced a similar growing trend in liquid funds to deposits ratio from 2019 to 2021. At year end, ABG held total liquid funds of GHS 5.7 billion against total deposits of GHS 5.2 billion whereas CAL held GHS 6.9 billion of liquid funds against total deposits of GHS 6.3 billion.
CBG, ZBL, FBN and SCB also demonstrated resilient positions in maintaining liquidity to deposit levels above the industry’s ratio. This is consistent over the past three years and especially so in the case of CBG, coming from the collapse and merger of seven banks and the need to restore customer confidence by staying highly liquid.
According to PwC, the industry’s liquid funds to total deposits increased by 5% from 88% in 2020 to 93% in 2021. The increase is explained by a more than proportionate surge in the industry’s liquid funds of 19%, from GHS 95 billion in 2020 to GHS 113.5 billion in 2021, compared to the relative 12% growth in total deposits from GHS 108.7 billion to GHS 121.8 billion for the same period.
This further asserts the banks’ position to continue providing security for depositor funds in the unlikely event of any significant withdrawals from mainly institutional and corporate customers.
