Societe Generale’s loan quality deteriorates as NPLs rise by 5.9% YoY
Societe Generale Ghana, one of the leading banks in the country, has experienced a decline in loan asset quality, as evidenced by its non-performing loans (NPLs) which increased by 5.9% YoY from 7.58% at the end of Q4 2021 to 13.48% at the end of Q3 2022. This indicates that the bank has seen a deterioration in the creditworthiness of its borrowers, leading to a higher risk of default and potential losses.
Despite the increase in NPLs, Societe Generale Ghana’s total assets value grew by GHS 1.1bn to reach GHS 6.5bn at the end of Q4 2022, up from GHS 5.4bn the previous year. This growth was driven by an increase in cash and cash equivalents as well as loans and advances to customers, which rose from GHS 963m to GHS 1.9bn and GHS 2.5bn to GHS 3.1bn respectively, in Q4 2021 and Q4 2022.
However, the bank’s liabilities also increased, with total liabilities reaching GHS 5.5bn at the end of Q4 2022, up from GHS 4.4bn the previous year. Deposits from customers accounted for the majority of the bank’s liabilities, amounting to some GHS 4.2bn.
Societe Generale Ghana’s Capital Adequacy Ratio (CAR), a measure of the bank’s ability to absorb losses, declined from 22.38% in Q4 2021 to 13.95% in Q4 2022. While this decline may raise concerns about the bank’s ability to withstand potential losses, it is worth noting that the CAR still remains slightly above the minimum CAR requirement of 13% set by the Bank of Ghana.
The decline in CAR may have also affected the bank’s profitability, as evidenced by the drop in net profit from GHS 183m at the end of Q4 2021 to GHS 110m at the end of Q4 2022. This decrease in net profit may be due to higher loan loss provisions, which the bank may have set aside to cover potential losses arising from its increase in NPLs.
Overall, Societe Generale Ghana’s Q3 2022 results suggest a mixed performance for the bank. While its total assets value grew, the increase in NPLs, decline in CAR, and lower net profit may raise concerns about the bank’s risk management practices and profitability going forward.
