CBG records Q1 2023 profit of GHS 10.4m, showing improvement over previous year
Consolidated Bank Ghana (CBG), a state-owned bank, has reported a profit of GHS 10.4 million for the first quarter of 2023, representing a favorable comparison to the GHS 6.1 million profit recorded during the same period in 2022. The bank’s improved profitability can be attributed primarily to a significant increase in interest income, which reached GHS 493 million by the end of Q1 2023, up from GHS 376 million in Q1 2022.
CBG also witnessed growth in its asset value, which rose from GHS 10.4 billion to GHS 11.1 billion during the review period. Notably, the value of the bank’s investment securities experienced a substantial increase, climbing from GHS 5.1 billion to GHS 7 billion.
However, the bank faced challenges in terms of its liabilities, which grew from GHS 9.6 billion to GHS 11.8 billion. This increase was mainly driven by higher customer deposits, which amounted to GHS 8.2 billion by the end of Q1 2023.
A concerning aspect of CBG’s financial performance is its Capital Adequacy Ratio (CAR), which saw a significant decline from 20.08% in Q1 2022 to -7.6% in Q1 2023. This indicates that the bank lacks the necessary capital to absorb potential or unexpected losses. Moreover, the negative CAR implies a lack of funds set aside to protect customer deposits in case of financial instability.
Given the bank’s negative CAR, it becomes imperative to inject additional funding to restore CBG’s financial stability and bolster its ability to address any potential losses. The negative CAR underscores the importance of shoring up the bank’s capital base to ensure its long-term viability and safeguard the interests of its customers.
In addition to the CAR concerns, CBG faced a deterioration in its loan asset quality. The non-performing loans (NPLs) of the bank increased from 0.73% in Q1 2022 to 26.73% in Q1 2023, indicating a higher proportion of unpaid loans compared to the previous year. This trend raises concerns about the bank’s ability to manage credit risk effectively and highlights the importance of implementing robust measures to address and reduce the level of non-performing loans.
As CBG navigates these challenges, it will be essential for the bank to focus on improving its capital position, enhancing loan portfolio management, and implementing effective risk mitigation strategies. By addressing these issues, CBG can work towards restoring its financial strength and maintaining stability in Ghana’s banking sector.
