Arguably, 2020 has been the most remarkable year for the Ghanaian banking industry, given the fact that despite the numerous risks – credit risks, asset quality deterioration, operational risks, low profitability, among others – that faced the sector as a result of the advent of the Covid-19 pandemic, the sector defied all odds and posted impressive growth levels for last year.
A critical examination of the end of 2020 Audited Financial Statements of the banks by norvanreports, indicate that the majority of the banks in the country witnessed growth in total assets value, profit after tax income, Capital Adequacy Ratio (CAR), holdings of investment securities and reduced liabilities.
Using seven (7) metrics; total assets, deposits, profit, cash and cash equivalent, non-performing loans, capital adequacy ratio and dividends, norvanreports in this analysis lists the banks that performed extremely well in the aforementioned metrics.
Total Assets
Cumulatively, the total assets value of the top 5 banks amounted to Ghs 65.52 billion, more than one-third of the total assets value base of the entire banking industry which is currently valued at Ghs 152 billion by the Bank of Ghana (BoG).
- First Position – Ecobank Ghana: Ghs 15.8 billion
- Second Position – GCB Limited: Ghs 15.32 billion
- Third Position – Stanbic Bank: Ghs 12.7 billion
- Fourth Position – Absa: Ghs 12.5 billion
- Fifth Position – Fidelity Bank: Ghs 9.2 billion
Customers’ Deposits
A slowdown in credit growth which reflected the pandemic-induced low credit demand and supply conditions and elevated credit risks was witnessed over the course of last year as demand for credit by businesses and households fell.
While demand for credit fell, deposits by customers at the various banks increased. Total deposits according to the BoG, grew by 25.1 percent year-on-year to GH¢104 billion as at end-February 2021, compared to the 15.6 percent recorded a year earlier when total deposits amounted to Ghs 82.7 billion.
- First Position – GCB Limited: Ghs 11.4 billion
- Second Position – Ecobank Ghana: Ghs 11.3 billion
- Third Position – Stanbic Bank: Ghs 9.66 billion
- Fourth Position: Fidelity Bank: 6.16 billion
- Fifth Position: Zenith Bank: Ghs 5.79 billion
Profit
In all the financial statements perused by norvanreports, no bank in the country fell short of making profit over the course of 2020. Most of the banks made huge profits, mainly driven by their net interest income as well as operating income.
- First Position – Access Bank: Ghs 639 million
- Second Position – Ecobank Ghana: Ghs 543 million
- Third Position – Absa Bank: Ghs 515 million
- Fourth Position – StanChart Bank: Ghs 478 million
- Fifth Position – GCB: Ghs 439 million
Cash and Cash Equivalent
Cash equivalent refers to assets of the bank which can easily be converted into cash, whereas the cash refers to the physical amount banks have piled up in their accounts.
- First Position – Stanbic Bank: Ghs 4.02 billion
- Second Position – Ecobank Ghana: Ghs 3.8 billion
- Third Position – StanChart Bank: Ghs 2.72 billion
- Fourth Position – GCB: Ghs 1.56 billion
- Fifth Position – Absa Bank: 1.51 billion
Non-Performing Loans (NPL)
NPLs is indicative of level the of deterioration in the loan asset quality of banks. NPLs according to the BoG at end-February 2021, was to Ghs 7.3 billion reaching 15.3 percent at end-February 2021. For the period under review, banks which were able to significantly reduce their NPLs and avoid bad debts were;
- First Position – Guaranty Trust Bank: Ghs 0.98%
- Second Position – First National Bank: 3.5%
- Third Position – Zenith Bank: 6.15%
- Fourth Position – Ecobank Ghana: 6.2%
- Fifth Position – Stanbic Bank: 7.5%
Capital Adequacy Ratio (CAR)
A strong CAR implies that the bank has enough capital to absorb potential losses incurred due to bad loans.
It also means that the bank is highly unlikely to become insolvent and very capable of protecting depositors’ monies.
It is a measurement of a bank’s available capital expressed as a percentage of a bank’s risk-weighted assets and liabilities.
- First Position – FBN Bank: 74.62%
- Second Position – Bank of Africa: 46.38%
- Third Position – Guaranty Trust Bank: 43.85%
- Fourth Position – Zenith Bank: 43.17%
- Fifth Position – First National Bank – 37.16%
Dividends
Most banks for the year 2020, did not make dividend payments. This was in strict adherence to the directive by the BoG for banks to hold onto dividend payments for 2020 and 2021.
However, provisions for payments of dividends to shareholders were made by banks in their 2020 financial statements and should banks be given clearance or the go ahead by the BoG, payments of declared dividends for 2020 will be made.
- First Position – Fidelity Bank Ghs 9.98
- Second Position – Republic Bank Ghana: Ghs 6.06
- Third Position – Absa Bank: Ghs 5.24
- Fourth Position – StanChart: Ghs 3.54
- Fifth Position – Ecobank Ghana: Ghs 1.69
