Agricultural Development Bank set to divest its investments in four institutions

GHANAAgricultural Development Bank is set to divest its investments in four institutions including Ghana International Bank and Metro Mass Transportation Limited.

The bank holds 9%, 10%, 16% and 20% in the Ghana International Bank, Agridev Real Estates Limited, Metro Mass Transportation limited and Activity Venture Finance Company, respectively.

The value of investment in Ghana International Bank Limited as at the time of the directors report was estimated at GH¢70,170 (US$11,706.90) which represents 11% of the net of own funds of the Bank (GH¢ 639,224- US$106,645.77).

This holding the directors report stated is in breach of section 73(1) of the Banks and Specialised Deposit-taking Institutions Act, 2016 (Act, 930), that states the Bank or Specialised Deposit-taking Institution shall not invest or hold investments in the share capital of a body corporate other than a subsidiary of the bank or specialized deposit-taking institution if the amount of investment exceeds 10% of the net own funds of the bank or specialized deposit-taking institution.

Also, it said all the bank’s investments in non-subsidiary institutions are in breach of section 73(3) which states that “Bank or Specialised Deposit-taking Institution shall not invest or hold investments in the share capital of a body corporate other than a subsidiary of the bank or specialized deposit-taking institution that represents more than five percent interest in the body corporate”.

The directors’ report however said management has engaged the necessary processes to divest these investments accordingly. It also pointed out that “management has assessed the financial implication of the non-compliance and concluded that it is not material to the financial statements taken as a whole.”

In a related development, ADB increased its ranking in the banking industry in 202o. The bank climbed up three places to place 17th from a previous position of 20th out of the 23 banks in the country.

The bank’s improved ranking reflected improvements in the bank’s relevant indices as the bank for the year 2020 posted an astonishing 441 percentage points increment in profits.

The increment in the bank’s profit for 2020 was on the account of increments in the bank’s net interest income and operating income.

ADB’s total assets value also saw an increase of some GH¢ 1.2 billion (US$0.20bn) on a year-on-year basis, as total assets value increased from GH¢ 4.5 billion (US$0.75bn) in 2019 to GH¢ 5.7 billion (US$0.95bn) in 2020.

The bank’s loan asset quality over the period from 2019 to 2020 improved, with Non-Performing Loans (NPLs) amounting to 34 percent of total loans made end-2020 as against the 41 percent of total loans recorded end-2019.

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