Be prudent in risk assessment – Economist to local banks

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Dr Richmond Atuahene, a banking consultant, has urged local banks in the country to be cautious in their risk assessment in order to improve their non-performing loans.


His call comes as a result of foreign-owned banks outperforming domestic banks between 2019 and 2020.

Data from the financial statements of some of the country’s leading banks for the fiscal year ended 2020 show an increase in profits for some and a decrease for others; however, foreign banks outperform local banks.

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This is based on the Summary Statements of Comprehensive Incomes of ten of Ghana’s top banks during a year when COVID-19 devastated all aspects of the economy.

For example, ADB saw the highest increase in profits from 2019 to 2020 among the ten banks reviewed by Citi Business News, with a 340 percent increase from 2019 to 2020.

Profits of approximately GHS14.8 million and GHS65 million were recorded by the bank at the end of 2019 and 2020, respectively.

Consolidated Bank Ghana saw its profit drop the most steeply of the ten banks examined, by approximately 33%, from approximately GHS70 million in 2019 to GHS46 million in 2020.

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Profits at Ecobank Ghana, which has one of the largest asset bases in the banking sector, increased by about 23%, from over GHS440 million in 2019 to over GHS540 million in 2020.

GCB’s profit only increased marginally by about 4 percent from about GHS420 million in 2019 to about GHS 440 million in 2020.

Other banks like Standard Chartered, Zenith, and Access however saw profits sour by over 30 percent from 2019 to 2020.

Standard Chartered Bank for example saw its profits jump by about 70 percent from GHS281.9 million in 2019 to about GHS478 million in 2020.

Access Bank and Zenith Bank saw similar percentage increases in their profits, about 38 percent, with profits of Access Bank rising to over GHS240 million in 2020 from over GHS170 million in 2019, while Zenith Bank ended 2020 with about GHS340 million from about GHS245 million in 2019

Even though its profit numbers were still high in 2020, over GHS250 million, Fidelity Bank still saw its profitability wane slightly by about negative 3 percent from about GHS260 million in 2019.

In an interaction with Citi Business News monitored by our team, Dr Atuahene explained that foreign banks were prudent in their risk assessment as they do not have many government contracts, he further attributed their strong corporate governance structures from over the years to their good performance

“The reason why they also have lower profitability is that some of them are financing government contracts. why the foreign banks are not interested in government loans and contracts especially if the contract is backed by World Bank let’s say a road   for world bank construction, if you complete it you get your money quick and all these are local banks and that will affect their profitability because you need to write off your non performing against your profit so until the economic environment  the government for awarding these contracts see that the cash flow is going to come I will pay you before one year then the foreign banks will not go there”.

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