StanChart amid Covid pandemic makes fresh loans worth $70 million
Standard Chartered Bank, says it made fresh loans to the tune of $70 million in last year alone to businesses, particularly those in the productive sectors of the economy amid the Covid-19 pandemic.
According to the bank, the huge loan made to both existing and new clients amid the pandemic is indicative that despite the adverse impact of the pandemic on businesses and the economy at large, the bank did not withdraw its financial intermediation services and loan provisions to businesses amid the pandemic.
“The last time I checked we granted over $70 million worth of new loans last year to both existing and new clients [manufacturing firms], banks will always naturally analyse sectors before giving out loans, if the sector is performing bad banks will withdraw from making loans, but if the sector is good, banks will support that sector with loans and that’s exactly what we did last year,” said Chief Financial Officer of Standard Chartered, Kweku Nimfah-Essuman.
Mr Nimfah-Essuman made the assertion during the virtual post Annual General Meeting (AGM) media engagement session on Wednesday, July 28, 2021.
His statements were in response to a question on the magnitude of loans made to businesses last year given the low demand for credit by the private sector on the back of the Covid pandemic.
Speaking further on the issue of low credit demand by the private sector, Mr Nimfah-Essuman remarked that loans were readily made available by the bank to businesses, however, demand for loans by business was rather low.
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“Just as the BoG said, the banks are well capitalized and very liquid and as such can give out loans, but you also need to have people or businesses who are willing to come for the loans and I think that is where we have a bit of a problem in the country, businesses working in the productive sector of the economy for instance, are for now not really investing that much, so I think that’s where the challenge is, there has to be enough or sufficient demand for loans for us to respond to. And when that happens credit to the private sector will grow [sic],” he added.
“We have extended loan facilities to clients but clients haven’t taken advantage of it and so that accounts for the decline in lending and at the same time most of the clients are repaying loans and not taking on new ones because in a difficult businesses environment, businesses are cautions to take on loans and so all these account for the low credit growth and not just banks not willing to give out loans to businesses [sic],” added the CEO of Standard Chartered, Mansa Nettey.
Touching on the bank’s non-performing loans (NPL) for 2020, Board Chair of Standard Chartered, Dr Emmanuel Kumah, noted that the bank’s loan loss provision has dropped significantly hence the bank has no challenges with its NPLs, giving no further details on the bank’s current NPL levels.
Dr Kumah’s comments was in response to growing concerns of high NPLs being recorded among banks in the country for the second quarter of 2021.
Banks such as the Agricultural Development Bank (ADB) and GCB, have for Q2 2021 posted NPLs above the banking industry’s average of 17 percent with NPLs of 31 percent and 20.7 percent respectively.
The high NPLs of the two banks have been partially attributed to loan repayments challenges faced by businesses due to the pandemic as well as the 3-12 months moratoriums provided by banks in the country to businesses.
At the virtual post Annual General Meeting (AGM) media engagement session, the Board of Directors following the acceptance of the shareholders of the bank, approved some Ghs 1.74 pesewas as payment of dividends for the bank’s equity holders for last year after posting an earning per share of Ghs 3.54 pesewas.
The approved dividend for 2020, represents an 11 percentage points increment when compared to the Ghs 1.56 pesewas paid as dividends in 2019.
Standard Chartered Ghana ended 2020 with a strong performance recording a profit growth of 41 percent on a year-on-year basis.
Profits recorded by the bank at end-December 2020, stood at Ghs 478 million as against the Ghs 281 million profit recorded end-December 2019.
The boost in the bank’s profit for the year under review, per norvanreports perusal of StanChart’s 2020 Audited Financial Statements, is attributed to a surge in the bank’s operating income from a previous figure of Ghs 853 million end-2019 to a little over Ghs 1 billion end-2020.
