First Bank Nigeria (FBN) Ghana for the year 2020, increased its Capital Adequacy Ratio (CAR) from 34.86 percent to 74.62 percent.
This is according to the bank’s Audited Financial Statement for 2020 and spotted by norvanreports.
The significant increase in the bank’s CAR bodes well for FBN Ghana, as this means 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.
The capital adequacy ratio (CAR) is a measurement of a bank’s available capital expressed as a percentage of a bank’s risk-weighted assets and liabilities.
Capital Adequacy Ratios mandate that a certain amount of the deposits be kept aside whenever a loan is being made. These deposits are kept aside as provisions to cover up the losses in case the loan goes bad.
The bank’s CAR ratio of 74.62 percent is 5 times the regulatory 13 percent CAR set by the Bank of Ghana (BoG).
FBN Ghana, for the period under review, also reduced it’s Non-Performing Loans (NPLs) by some 10.35 percentage points from 17.93 percent in 2019 to 7.58 percent in 2020, thereby improving upon its loan asset qualify.
Profit recorded for 2020, was Ghs 37.4 million slightly above the Ghs 35.6 million for 2019.
With regards to dividend payments, no change was witnessed as the Ghs 0.09 pesewas dividend paid in 2019 was maintained in 2020.
An increase of Ghs 540 million in the bank’s assets value was recorded with total assets value amounting to Ghs 1.81 billion end-2020 from Ghs 1.27 billion end-2019.
Total liabilities recorded for the year increased from Ghs 790 million in 2019 to Ghs 1.29 billion at end-December 2020.
