Ghana Banking Survey 2012

2012 Ghana
Banking Survey
Enhancing customer value
to sustain profitable growth
www.pwc.com/gh
September
2012
1
Introduction
2012 Ghana Banking Survey 3
After successfully raising the required regulatory capital, the next critical action for banks is
to optimise the allocation of capital across the business value chain, from service delivery to
lending. In order to deliver value to their customers, banks must transform their operations,
including people, products, networks and channels, processes and technology for greater
efficiency.
Going forward, banks must re-visit their customer operating models and re-define or identify
the next drivers of growth in terms of products, sectors and geography and allocate adequate
risk capital and people to serve the customer. This has become necessary as consumer behav-
iour is changing towards a more advanced lifestyle where technology driven products and
services are becoming standard requirements. The more banks respond to growing consumer
expectations the more they will be required to develop risk profiles around the new business
direction which will be driven largely by technology.
With 25 universal banks and over 120 other financial institutions, the customer has a choice
and hence banks must demonstrate that they are meeting customer expectations in their bid
to drive growth and expansion in deposits, loans, commissions and fees and improved prof-
itability in the medium to long term.
Transforming service offerings to customers is essential for sustainable growth and must be
driven by both the Regulator and banks. The Regulator must provide the institutional frame-
work and banks must see their customers as partners with mutual and complementary inter-
ests. In so doing, banks will achieve their optimal value for all stakeholders while balancing
risks and maintaining profitability in the medium to long term.
A message from our CSP
PwC
Felix Addo
Country Senior Partner
The capital landscape has improved tremendously and consequently improved the resource
capacity of the industry as a whole. To me, the key to sustaining this fine landscape in terms
of continuous service delivery is Trust.
Within a trust dominated banking environment, competition and economic growth works.
You either have banking based on trust or banking based on risk; with trust, you can rely on
banks to act with due regard to interest of those they serve. With risk dominated banking, the
financial services structure depends instead on the structure of laws, regulations, Banking
Supervision Departments interventions, Contracts, Commercial Courts, Punishments and
penalties to drive banking and service to those they serve. This adds on to costs. Thus
target-oriented banks will find ways of outwitting regulations. After several years of practice,
I can conjecture that without trust, self-interest defeats regulations, undermines institutions
and causes system failures.
If we are to sustain our present gains and serve our clientele to the best of our abilities, we
need, as participants in the financial services industry, to build Trust so that we can
maximise the returns on the resources emanating from our present healthy capital levels.
A message from the Executive Secretary of the
Ghana Association of Bankers
PwC
D. K. Mensah
Executive Secretary of the
2
Enhancing customer
value to sustain
profitable growth
Introduction
As part of this years survey, we interacted with senior executives of banks to get their perspectives on the direction of the industry over
the next five years. Our interactions were around matters of change in the industry, the likely bases for competing in the future and key
constraints to growth. Our discussions with these bank executives were on the following matters:
What in your view will be the main drivers of change in the banking industry over the next five years and why?
Historically, banking in Ghana has been profitable; where do you think the next wave of high incomes and profits will be coming
from?
On what basis will banks compete over the next five years?
What do you see as the greatest hindrance to growth over the next five years?
After capitalisation, what is the immediate next step?
We point up that the graphs represent the perspectives of key industry executives. In the commentary, we have added our own thoughts
following our discussions with these executives.
2012 Ghana Banking Survey 6 PwC

Q1. What in your view will be the main drivers of change in the banking
industry over the next five years and why?
Overall, banks feel that the Regulator and
regulation are likely to be the biggest drivers
of change in the near future.
Over the past half decade, the Regulator has
played a big role in shaping current trends in
the industry. The increase in banks paid-up
capital requirements, adoption of IFRS for
reporting performance, and the introduction
of risk-based banking supervision all have
and continue to influence activity in the
industry.
Especially with the aftermath of the credit
crunch in some developed economies
governments and regulators are playing
increased roles in market-driven economies
and consumer-driven markets. It is clear
that BoG is expected to continue to wield a
significant amount of influence to determine
the future direction and pace of change in
the banking industry.
Banks expect to position themselves such
that they are able to effectively contribute to
the process of developing regulations, such
that new regulation is sensitive to banks
operational needs as well as the needs of
their investors.
The next big thing that banks expect will
influence change in the industry is
considered to be competition. Bank
executives acknowledge that with the
additional capital that they have procured,
there is even more pressure to produce
above market average returns to investors.
Thus, in the near term, banks expect there
will be significant jostling within the
industry to secure domestic market with
such competition being more aggressive
among the domestic banks, rather than from
new market entrants.
Private and institutional investors are
making inroads or deepening their
investments in Ghanaian banks. These
include International Finance Corporation
(IFC), Etablissements Delhaize Freres
(DEG), Propaco,
Financierings-Maatschappij voor
Ontwikkelingslanden (FMO) and Kedari
nominees.
While the macro-economy has been described as having posted high growth rates in the
past few years and further shows a high growth potential, banking services penetration has
been limited at less than 30% of population. The low penetration has been attributed to a
range of factors, including the existence of a large subsistence economy that seems not to
need banking services, cultural mindsets that lack the appetite for banking services, and
the industrys general failure to produce innovative products that would be appealing to
the peripheral consumer.
Bank executives saw population growth as having only a minor role in shaping the future
of the industry. Interestingly, the new type of customer (i.e. the young, technology savvy
consumer) is not considered to be influential as yet in banking markets.
0 2 4 6 8 10
Population
Growth
New/ different
type of customer
Trends elsewhere in
other geographies
Private Equity Funds/
Strategic investor/
New Market Entrants
Competition
Regulation
Drivers/ Levers of Change
Q2. Historically, banking in Ghana has been profitable; where do you think
the next wave of high incomes and profits will be coming from?
Bank executives were requested to express
their views using three different dimensions:
business segments; economic sectors; and
products.
On business segments, banks expect that
institutional banking clients will continue to
dominate transactions in the banking
industry, followed by SMEs. In both 2010
and 2011, more than 80% of deposit
liabilities held by banks were of a non-retail
nature.
Bank executives noted that the sheer
capacity and income streams, of institutional
or corporate banking customers would most
likely allow them to demand significant
amounts of the resources put up by the
banking industry. This is also in recognition
that as the Oil and Gas (O&G) sector of the
economy develops, related activities from
that sector would fuel further growth in the
demand for institutional banking services.
The next business segment expected by the
industry to contribute significantly to bank
incomes and profits is the SME sub-sector.
Historically squeezed for credit by the
banking industry on grounds of
unstructured governance and high credit
default risks, SMEs are more and more
being touted as key players in the countrys
next wave of economic growth. Indeed, some
banks have now established focused SME
departments and have acquired capacity to
address the peculiar needs of SMEs. This
development has prompted more
conservative banks to develop products for
SMEs.
Without a doubt, SMEs carry a risk profile
that is different from larger and more
structured corporate institutions. In our
view, it is critical that banks acquire the
requisite expertise to properly understand
the business dynamics and related risk
profiles of SMEs in order to avoid undue
exposure of their risk capital, leading to
reduced profits.
Bank executives further noted that mid-tier
income retail customers (i.e. mass affluent
retail customers) will continue to remain an
important factor in their business,
contributing cheap deposits and helping to
optimise net interest margins and profits.
0 2 4 6 8 10
Retail Banking
High Networth
Retail Banking
Mid-tier Income
Retail Banking
SME Banking
Corporate/
Institutional Banking
2(A) Which business segment is likely to contribute the most to future incomes
and profits?
On the economic sectors expected to
contribute the most to future incomes and
profits, bank executives rated the oil and gas
sub-sector as the most likely area of
growth. In this regard, banks generally
acknowledged the need to acquire requisite
capability (capital and knowledge in the
industry) to convert the opportunities into
tangible business transactions. The local
content legislation must play a role to
compel the O&G industry to include
domestic banks in funding key transactions
or activities in the industry. We agree that
vast opportunities exist along the entire
value chain of the O&G sub-sector, and the
earlier banks invest to build capacity, the
better.
Many bank executives assess that in the
medium term, Ghanas economy will remain
significantly import dependent and see
commerce (trading) as the additional
economic activity that will continue to
contribute the most to the industrys
incomes and profits, in light of its potential
to generate multiple income streams.
PwC
0 2 4 6 8 10
Agriculture
Manufacturing
Commerce (trading)
Oil & Gas
- 2 4 6 8 10
Mobile Banking
Electronc Banking
Trade
On the assessment of what products would
count towards the industrys incomes and
profits in the medium term, banking
executives identified unfunded income from
Trade. A highly specialised form of banking
and conducted within a very well organised
international environment, structured
trade (and commodity) finance provides the
banking industry with a fairly safe source of
non-interest income.
However, the winners in this space would be
the banks that maintain a wide network of
credible correspondent banks in the
countries where most of Ghanas imports
originate, build deep technical knowledge of
applicable trade products and the related
documentation, and invest in technology
that assures speedy and efficient transfers of
documentation and funds.
Next, banks noted that electronic banking
would play a significant role in generating
incomes and profits for the banking
industry. At present, most of the banks
within the industry offer some form of
electronic banking which allows customers
view-only access to their account balances
and transactions through notifications by
SMS and email.
A few players in the industry already have
the technology that allows their customers to
safely and securely execute transactions by
themselves using a variety of electronic
platforms or channels. At present some
banks treat this as a product and derive
revenue from transactions. However,
electronic banking will increasingly become
a minimum requirement for customer
satisfaction, and banks will increasingly use
it as a tool to mobilise critically required
cheap deposits rather than to directly
generate fee income.
Consistent with what the industry generally
assesses the role of the new type of
consumer to be over the medium term,
banks do not think that mobile banking
(mobile money) is going to play a significant
role in the generation of incomes and
profits.
2(C) Which product is likely to contribute the most to
future incomes and profits?
2(B) Which economic sector is most likely to contribute the
most to future incomes and profits?
The majority of bank executives interviewed
rated people as the variable that would
matter most to banks in the battle for the
future. The industry defined people to
include employees, (including management)
customers, and shareholders.
Banks emphasised that the increased
competition in the domestic industry and
access to global capital markets mean that
more likely than before, bank customers
would start requesting for more
sophisticated products and services than the
industry has been used to. This will require
specialised skill sets to develop products
and stringent policies by the Regulator to
monitor the activities of banks.
Another dimension of people that banks
consider very important as a competitive
variable is customers. Bank executives
consider the quality of customers to play a
critical role in banks businesses , as it has
an impact on revenues, costs and therefore
profits or losses.
Referrals by top-rated customers also tend
to generate healthy business for banks,
without banks needing to spend significant
levels of resources in due diligence to assure
themselves that the associated risks are
Q3. On what basis will banks compete over the next five years?
acceptable within their risk management
frameworks. Additionally, banks remarked
that the association tendency (known
customers) would tend to make peer
businesses within the same or related
industries to want to do business with the
same bank, especially when the bank is
provided good references by one of their
own (another bank).
Within the allowable limits of exposure
defined by regulations on sectoral
concentration risks, banks are therefore
likely to adopt some very aggressive
strategies in marketing to these known
customers.
Yet another category of people defined by
the banking industry is shareholders.
Banks explained that in light of the clout
that institutional investors especially wield
in the governance of banks, it is important
to have the right shareholder committed
to sustaining long term profitable growth.
Bank executives therefore noted that, in
light of the pending deadline for meeting
the regulatory requirement related to
minimum paid up capital, some banks
might have entered into uneasy
marriages. How such relationships play
out would only be a matter of time.
Industry players acknowledge the critical
importance that cheap deposits play in the
survival and profitability of banks. Banks
noted that they would consider both brick
and mortar, and electronic channels in
extending their reach for competitive
reasons. Banks have been slow in
deploying IT platforms for product
development because of the perception
that the Ghanaian market is not ready for
electronic channels. In spite of this
reluctance, we are of the view that there
are clear signs that change is coming to
how banks conduct business through their
distribution channels.
In many places, advances in telecoms have
had some impact on product development
and distribution. M-Pesa money transfer
service (the Kenyan success story) is a good
example of a highly successful partnership
between the financial services sector and
the telecoms industry. M-Pesa has
demonstrated that with the right business
model, banks could get peripheral
customers of the banking industry
interested in banking services. With most
phones currently having data exchange
functionality, banks could leverage on the
present penetration of the mobile network
to rope in the hitherto unbanked
proportions of the population.
0 2 4 6 8 10
Correspondent Banking
Network
Brand-International, Strong/
National Character or Approach
Products and Services
Reach- Branch,
Techonology
People-Customers,
Employees, Shareholders
The basis upon which banks are likely to compete in the future.
Q4. What do you see to be the greatest hindrance to growth in the medium term?
The macroeconomic environment is
considered as a key factor that will affect
growth within the banking sector in the
medium term by the banking industry
executives. The current GDP growth and
stable inflation are favourable. However
depreciation of the cedi and rising interest
rates are threats to the business
communities ability to sustain profit and
growth. Bankers were of the view that if the
quality of customer credit profiles
deteriorates lending will continue to be a
challenge and that will adversely impact
profits.
Quality of risk management, management
capabilities, and governance were
considered as factors that could hinder the
growth of banks in the medium term.
Bankers were of the view that inadequate
and effective governance structures could
manifest into exposure concerns and
financial losses, thus affecting or slowing
down growth ultimately.
Strong management capabilities to
implement strategic decisions is necessary to
instil market and customer confidence in
banks and sustain growth. To remain
competitive banks must review their current
risk management framework in line with a
growing and sophisticated customer base,
develop and acquire the relevant skills set
for strategic decision making.
PwC
0 2 4 6 8 10
Capital Availability
Liquidity
Corporate Governance
Management Capabilities
Regulation
Quality of Risk Management
Others (?)
Credit Risk
Interest Rates
Macro-Economic risk
Currencies
Hinderances to growth
Strong management capabilities to implement stra-
tegic decisions is necessary to instil market and cus-
tomer confidence in banks and sustain growth. To
remain competitive banks must review their current
risk management framework in line with a growing
and sophisticated customer base, develop and ac-
quire the relevant skills set for strategic decision
making.
Q5. After capitalization what is the next immediate step?
The question is after capitalisation what is
the next step, what are the critical resources,
elements, or objectives of Banks? Bank
executives ranked the priorities in the
allocation of capital as shown in the chart.
Local and global competition is intense and
articulating a medium term strategy is
paramount for aggressive growth. In
allocating capital resources to enhance the
capability to mobilise deposits and service
customers, the banks strategy will focus on
the Corporate Banking (including SME)
business units.
Liability driven expansion was considered
the second most important priority. In
trapping deposits banks must aim to have an
efficient mix of demand and savings deposits
to fixed deposits over the medium term.
PwC
The right skills set and continuous
development programmes are essential to
build capacity for planned growth. The first
step is to articulate a people and change
strategy to bring in line the current people
skills and knowledge with strategic direction
of the banks.
Transformation of the entire business
process was ranked fourth in order of
priorities. Banks must allocate capital to
transform their service delivery platforms,
infuse a new service culture, and transform
sales behaviours to ensure that capital is
adequately utilised in an effort to improve
return of equity and assets.

Technology makeover is not considered to
be of priority. This is not surprising because
global banks can leverage on the state of the
art technology provided by the group. While
local banks are focusing on optimising
business performance, keeping pace with
technology does not feature as a priority.
0 2 4 6 8 10
Technology Makeovers
Transformation
Capacity Development
Liability driven Expansion
Strategy Development
Next steps
3
Overview:
the economy
Economic Growth
The Ghanaian economy has experienced an annual GDP growth of
14.4% in 2011 compared to 8.0 % in 2010. By separating the effects
of the oil sector, the real GDP growth rate of 8.7% marginally
outperformed the 2010 GDP growth rate by 0.7%. Driven by a
combination of strong growth in the mining and oil sectors real GDP
growth is expected to increase to a rate of between 7.5% to 8.0% in
2012.
PwC
The Agricultural sector continues to experience low growth,
resulting from a significant fall in the growth of forestry and logging
activities and fishing and crop production sub-sectors. This decline
is attributed to ecological conservation and relatively low
re-afforestation programme.
The steep growth in the Industry Sector was mainly on account of
crude oil production thus becoming the second largest sector after
Services; a position occupied by Agriculture in the past few years.
The Industry Sector (including Oil) recorded a growth outturn of
15.5% in 2011 compared with a non-oil growth of 5.6% in 2010. The
growth in Industry Sector was underpinned by a more than doubling
of the size of the Mining and Quarrying subsector mainly on
account of crude oil production. Construction and manufacturing
sub-sectors also performed remarkably, growing by 20.0% and
13.0% in 2011 and 2010, respectively. The performance of the
construction sub- sector can be attributed to the investments in road
infrastructure.
The growth rate for the Services Sector dropped by 1.5%, the sector
still maintains itself as the largest sector in Ghanas economy. The
main drivers of growth in the sector include trade, and household
sub-sector, which grew by 17.9%. The information and
communication sub sector grew by 17.0%.
8.5%
4.0%
8.0%
14.4%
0%
2%
4%
6%
8%
10%
12%
14%
16%
2008 2009 2010 2011
GDP growth rate
Source: Ghana Statistical Service
Headline inflation and interest rate
Inflation

Inflation fell from 9.1% in January 2011 to 8.6% in December 2011. During the first quarter of the year, inflation rose after the upward
adjustment in petroleum prices, from 8.6% in December 2010 to 9.2% in February 2011, but subsequently declined in the remaining
quarters.
The single digit inflation was sustained by low food inflation, which fell from 4.8% at the beginning of the year to a historical low of 2.8%
in June and subsequently rose to 4.3% by December.
Non-food inflation, which was 11.8% at the beginning of the year, increased to 12.4% by June 2011 but eased to 11.2% by the end of the
year.
PwC
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
2008 2009 2010 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov 2011
Headline inflation Prime Rate Base Rate
Source: Bank of Ghana Statistical Bulletin
Interest rates
The policy rate which stood at 18% in December 2009 fell to 13.5% in July 2010 and further reduced by 50 basis points each in May and
July 2011 to bring the rate to 12.5% where it remained up to the end of December 2011. The rate was revised upwards to 15% in June 2012
and remained unchanged at September 2012.
The average base rate in the industry fell from 24.3% to 21.5% in 2011. Lending rates in the industry followed a similar trend and dropped
from an average of 27.6% in January to 25.9% in December 2011.
In 2011, the money markets witnessed a downward trend: the 91day and 182-day treasury bills declined from 12.16% and 12.68%,
respectively to 10.30% and 11.1%.

Foreign exchange rate
Ghana Stock Exchange (GSE)
On 4 January 2011, the Ghana Stock Exchange introduced the GSE Financial Stocks Index (GSE-FSI) for measuring the performance of
the listed financial institutions. The base index value was set at 1000 points.
On 31 December 2011, the GSE-FSI had dropped by 3.10% to 969 points. Despite improved profitability of the listed financial
institutions, the movement in share price does not reflect this trend.
Market capitalization went up by 136.59% from the December 2010 value of GH20.12billion to GH47.35billion in 2011. The increase
was due mainly to the listing of Tullow Oil Plc. During the year, Accra Breweries Limited and CFAO voluntarily delisted from the Ghana
Stock Exchange, bringing the total number of equities listed to 34.
Source: Ghana stock exchange website.

0.00
0.50
1.00
1.50
2.00
2.50
3.00
US Dolar Pound Sterling EURO
Source: Bank of Ghana Statistical Bulletin and Annual progress report for the year 2011 :
Ministry of Finance and Economic Planning.
Ghana Stock Exchange
Exchange rate
Based on these unfavourable trends, the Ghana Cedi traded weaker during 2011 compared to the same period in 2010. In the InterBank
Market, the Ghana Cedi depreciated by 5.0%, 10.5% and 7.6% against the US dollar, British pound sterling and Euro respectively com-
pared to depreciation of 3.1% against the dollar and appreciation of 2.0% and 5.7% against the pound and Euro respectively in 2010.
The Central Bank has since introduced measures to check the persistent weakening of the Ghana Cedi.
4
Overview:
the industry
PwC
Industry developments in 2011- Banking regulatory and supervisory framework
Anti - money laundering
The Anti-Money Laundering and the
Combating of the Financing of Terrorism
(AML/CFT) Guidance for Banks and
Non-Bank Financial Institutions was jointly
prepared and published by the Bank of
Ghana and the Financial Intelligence Centre.

The guidelines include; customer due
diligence, monitoring and responding to
suspicious transactions, reporting
requirements and record keeping.
The regulations should be enforced to
support the banks safeguard against
exposure to money laundering. Sanctions
from the international community for
infringements will have an adverse effect on
relationships with correspondent banks and
growth of banks in Ghana.
Credit referencing
In addition to XDS Data Ghana Ltd, another
credit reference bureau, Hudson Price Data
Solutions, was issued with an operating
licence, while Dun & Bradstreet was also
granted provisional approval during the year.
As at end-December 2011, all Deposit Money
Banks (DMBs) had signed up for credit
reference services and were sharing data,
while twenty-seven NBFIs submitted data to
the bureaux.
Financial institutions are gradually
embracing the idea of credit referencing with
most of the institutions incorporating credit
checks into their credit management
processes. The total number of hits (credit
checks) made by financial institutions
increased from 13,490 in 2010 to 79,200 in
2011. (Source data: Bank of Ghana website)
Developments in the settlement and
payment systems
Infrastructure projects were implemented to
improve the settlements and payments
system. These included extension of the
Cheque Codeline Clearing with cheque
truncation system nationwide and upgrade
of the Ghana Interbank Settlement System.
The first phase of the project to enhance
interoperability of the card-based systems in
the country was completed.
To further enhance interoperability among
banks and expand electronic retail banking
in the economy Ghana Inter bank Payment
and Settlement System (GHIPSS )
implemented the Open Switch and direct
debit components of the Automated
Clearing House (ACH) system. Further
improvements were made to the e-zwich
system. Improvement in the speed and
reliability of these settlement and
payments system will build trust and
transparency of the banks and move the
industry closer to a cashless economy.
Issue of securities for government
borrowing
At the end of the year, a total of GH11,
070.9 million was raised from the issue of
securities to finance Public Sector
Borrowing Requirements. Maturities
amounted to GH8,123.9 million, resulting
in net borrowing of GH20,947 million.
Business combination
In the past year, mergers and acquisitions
in the banking industry have been
encouraged with the expectation that the
merged institutions will be able to
undertake larger transactions.
By the close of the year 2011 , the
negotiations were in a far advanced stage
between Ecobank and The Trust Bank
Limited (TTB). Another business
combination between Access Bank Ghana
and Intercontinental Bank Ghana was
prompted by an acquisition of the latters
parent company in Nigeria by Access Bank
Plc. These transactions have since been
concluded.
Collateral Registry
In, 2011, the Bank of Ghana with the
support of the International Finance
Corporation (IFC) and Swiss State
Secretariat for Economic Affairs (SECO)
embarked on the redesign of the Collateral
Registry established under the Borrowers
and Lenders Act 2008, Act 773 to make the
Registrys systems, processes and
procedures modern and competitive with
Secured Transactions Registries across the
world.
The objective of the assignment is for the
development of a software and the
procurement of relevant infrastructure that
enables the Registrys services to be
discharged and accessed electronically in
real time.
Measures on Foreign Deposits
To curb the effects of the depreciating Cedi,
initially, the Monetary Policy Committee
(MPC) of the Bank of Ghana (BOG)
increased the policy rate and reduced the
limits on Net Open Position (NOP) of
banks. The measures were intended to
improve the attractiveness of cedi assets
and increase the supply of foreign
exchange to the market.
To reinforce the monetary policy stance
and restore stability and transparency in
the foreign exchange market, the Bank has
recently also decided on the following
measures:
11
The re-introduction of Bank of Ghana
Bills in the following tenors 30 days,
60 days and 270 days. This is intended
to support the monetary operations of
Bank of Ghana and provide additional
avenues for Cedi investments.
Revision in the application of the statu-
tory reserve requirement of banks to
include foreign deposit liabilities in
Ghana Cedis only. All banks will now be
required to maintain the mandatory 9%
reserve requirement in Ghana cedis
only. Consequently, banks will no
longer hold the reserves in different
currencies.
Provision of Cedi cover for vostro
balances. All banks are required to
provide 100 percent Cedi cover for their
vostro balances, to be maintained at
Bank of Ghana. This is in line with the
provision in the Operational Guidelines
Pursuant to the Foreign Exchange Act,
2006 (Act 723) that precludes foreign
investor participation in the short end
of the money market.
5
Quartile analysis
Operating assets (in billions of Cedis)
Industry Operating assets grew by GH16.4b in 2010 to GH19.9b in 2011
For a reasonable comparison
and analysis of the industry,
we group participating banks
into quartiles, based on the
value of their operating
assets. We consider banks
operating assets to be a key
business performance
indicator as well as the basis
for which stakeholder value is
derived, hence our choice of
this metric. All participating
banks have been ranked
based on the carrying
amounts of their operating
assets held as at 31 December
2011.
-
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
2011
2010 2009 2008
Cash Assets
Liquid Assets
Net Loans and Advances
Other Operating Assets
Growth in operating
assets is funded by the
improvement in deposit
mobilisation and capital
injection
Cash assets contributed 28% (2010: 27%) of
the total industry operating assets. The
increase was mainly a result of growth in
customer deposits by approximately 28%
which had a positive impact on the banks
reserves with the Central Bank. Some banks
including ADB, Stanbic and Baroda also
recapitalised during the period . The capital
injection improved the cash asset position.
We have presented in the next few pages
changes in quartile arrangements and
industry operating assets rankings.
PwC 2012 Ghana Banking Survey 21
Liquid assets is gaining prominence from being 16% (2008) to 29% (2011)
of total industry operating assets
Total operating assets grew from GH16.4
billion in 2010 to GH19.9 billion in 2011.
However, the mix of operating assets in the
industry for the year compared to 2010 did
not change.
Loans and advances continue to be the most
significant component of the industrys
earning asset as it contributes approximately
63% of total income of banks despite the
decline in the average lending rates from
27.3% in December 2010 to 25.9% in
December 2011. The contribution of net
loans and advances to total operating assets
declined marginally from 43% in 2010 to
41% in 2011.
In 2008, when most global economies were
experiencing financial crisis, net loans and
advances contributed 57% of the operating
asset portfolio in Ghanas banking industry.
The composition has steadily declined
because banks continue to exercise
constrains in lending as they purse various
actions to recover from non performing
debts. The risk free government securities
appear as an attractive investment option. Its
composition of operating assets grew from
16% in 2008 to 29% in 2010. The
composition of liquid assets to total
operating assets of the industry however
remained relatively unchanged in 2011.
28%
29%
41%
1%
27%
29%
43%
1%
28%
23%
47%
2%
26%
16%
57%
2%
0%
10%
20%
30%
40%
50%
60%
Cash Assets Other Liquid Assets Net Loans and Advances Other Operating Assets
2011 2010 2009 2008
Composition of industry operating assets
(Source: Bank of Ghana Statistical Bulletin )
The rapid growth experienced between 2008 and 2010 in operating asset is
slowing down
PwC
First Quartile
Group (Q1)
Second Quartile
Group (Q2)
Third Quartile
Group (Q3)
Fourth Quartile
Group (Q4)
Total operating assets for the six banks in the quartile increased by 88% from GH5.5billion (2008) to GH10.3billion
(2011).
GCB continued to be dominant in the operating assets of this quartile. The Banks operating assets increased from
GH 1.6 billion in 2008 to GH2.6 billion in 2011.
EBG now holds the second largest operating assets in the quartile with total operating assets of GH1.4 billion in 2010
to GH2 billion in 2011.
The group is the fastest growing as operating assets more than doubled from GH1.9billion (2008) to GH4.6billion
(2011).
Fidelity has the largest operating assets within the group. The Banks operating assets increased from GH631 million
in 2010 to GH1.1 billion in 2011.
CAL and NIB moved up three places in 2011 to occupy the tenth and eighth places respectively.
Total operating assets in Q3 increased threefold from GH1 billion (2008) to GH3.1billion (2011).
BOA moved out of this group to the fourth quartile, however the banks operating assets reduced from GH386 million
in 2010 to GH367 million in 2011.
UGL moved to join the group with a total operating assets of GH505 million (2010: GH341 million).
The operating assets of this group increased by 65% from GH1.1billion (2008) to GH1.8billion (2010).
HFC holds the largest operating assets in the quartile. The Banks operating assets increased from GH338 million in
2010 to GH407 million in 2011.
Energy Bank commenced operations during the year and joined this quartile. At the end of 2011 its operating assets of
GH193 million was ahead of existing players; FAMBL, BARODA and BSIC.

.
-20%
-10%
0%
10%
20%
30%
40%
50%
GCB EBG SCB BBGL Stanbic ADB
2011 2010 2009 2008
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
2011 2010 2009 2008
First Quartile Banks - Profit before tax margin
First Quartile Banks - Return on equity
First Quartile Banks - Impairment allowance/gross loans and advances
First Quartile Banks - Share of industry advances
SCB, ADB and Stanbic posted
increased PBT margins but
GCB suffered a decline.
Return on equity for BBG,
SCB and EBG continued to
dominate the group.
The quality of loan portfolio
of all banks in this group
appreciated over the year
with the exception of GCB.
EBG now has the largest
exposure to customers in the
market.
0%
5%
10%
15%
20%
25%
2011 2010 2009 2008
0%
5%
10%
15%
20%
25%
2011 2010 2009 2008
0%
2%
4%
6%
8%
10%
12%
14%
16%
2011 2010 2009 2008
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2011 2010 2009 2008
-80%
-60%
-40%
-20%
0%
20%
40%
60%
Fidelity NIB SG-SSB CAL ZBL IBG
2011 2010 2009 2008
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
2011 2010 2009 2008
First Quartile Banks - Share of industry deposits
First Quartile Banks - Cost income ratio
Second Quartile Banks - Profit before tax margin
Second Quartile Banks - Return on equity
GCB remains the largest
holder of deposits but EBG is
aggressively gaining market
share.
ADB and GCBs restructuring
and business transformation
cost had an adverse impact
on the CIR.
All the banks in this quartile
showed an improvement in
PBT except for ZBL and IBG.
Return on equity for NIB
significantly improved
compared to 2008.
1%
331,586
512,684
35%
0%
5%
10%
15%
20%
25%
30%
35%
40%
2011 2010 2009 2008
0%
1%
2%
3%
4%
5%
6%
2011 2010 2009 2008
0%
1%
2%
3%
4%
5%
6%
2011 2010 2009 2008
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2011 2010 2009 2008
Second Quartile Banks - Impairment allowance / gross Loans and advances
Second Quartile Banks - Share of industry advances
Second Quartile Banks - Share of industry deposits
Second Quartile Banks - Cost income ratio
NIB impairment loss
worsened despite creating a
SPV to pursue the non
performing loans.
Fidelity and CAL made
significant inroads in
gaining market share.
Q2 banks are steadily
gaining market share in
deposits.
Greater cost discipline led to
an improved CIR for all Q2
banks except for SC-SSB .
-80%
-60%
-40%
-20%
0%
20%
40%
60%
UTB UBA TTB PBL UGL GTB
2011 2010 2009 2008
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
2011 2010 2009 2008
Third Quartile Banks - Profit beforfe tax margin
Third Quartile Banks - Impairment allowance/gross loans and advances
Third Quartile Banks - Return on equity
Interest margins dwindled
during the year but the third
quartile banks sustained PBT
above 20%.
UBA has made strong
recovery since losses in 2008
to post the best ROE in Q3.
For the first time since incor-
poration UTB gross loan loss
fell below 5% but GTBs
worsened above 5%.
0%
1%
2%
3%
4%
5%
6%
7%
2011 2010 2009 2008
Third Quartile Banks - Share of industry advances
Third quartile banks holds
21.2% (2010: 19.8%) of the
market share in loans and
advances to customers.
0%
5%
10%
15%
20%
25%
-
2011 2010 2009 2008
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
2011 2010 2009 2008
-250%
-200%
-150%
-100%
-50%
0%
50%
100%
HFC BOA ABG ICB EBL FAMBL Baroda BSIC MBG
2011 2010 2009 2008
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
2011 2010 2009 2008
Third Quartile Banks - Cost Income Ratio
Fourth Quartile Banks - Profit before Tax margin
Fourth Quartile Banks - Return on equity
0%
1%
1%
2%
2%
3%
3%
4%
2011 2010 2009 2008
Third Quartile Banks - Share of industry deposits
Cost reduction strategies
adopted yielded results and
suppressed the CIR
BSIC recorded a positive
PBT margin for the first time
since 2008 and Baroda
recorded the highest profit
before tax margin in the
group.
HFC and ABG showed strong
return on equity.
All the banks in the third
quartile chalked some success
in deposit mobilisation except
GTB
0%
5%
10%
15%
20%
25%
2011 2010 2009 2008
0%
1%
2%
3%
4%
5%
6%

2011 2010 2009 2008
0%
1%
2%
3%
4%
5%
6%
2011 2010 2009 2008
0%
50%
100%
150%
200%
250%
300%
350%
2011 2010 2009 2008
Fourth Quartile Banks - Share of industry advances
Fourth Quartile Banks - Share of industry deposits
Fourth Quartile Banks - Cost Income Ratio
Fourth Quartile Banks - Impairment allowance / gross Loans and advances
The market share has not
improved compared to prior
year.
HFC total deposits continue
to increase compared to
prior years, whilst BOA and
FAMBL decreased.
Significant growth in income
had a favourable impact on
the CIR for BSIC.
BOAs impairment allowance
to gross loans and advances
increased considerably over
the f0ur-year period while
ABG and ICB showed
significant improvement.
6
Market share analysis
GCB consolidated its leadership in deposit mobilisation, with the largest
market share for the third consecutive year since 2009.
Share of industry total deposits
Deposits in the banking sector grew by 28%
from GH12.6 billion in 2010 to GH16.1
billion in 2011. The rates for time deposit
dropped over the period. Between 2008 and
2009 the deposit rates ranged between 14%
to 20%. However in 2011 the deposit rates
had declined to ranges between 6% to 9%.
The decline did not deter customers from
making placements with banks. Customers
continue to rely on banks to hold idle funds
because of the limited investment options in
money market.
Over the last three years that the industry
has experienced growth the second quartile
banks are showing faster growth than the
first quartile. The industrys first quartile
bank had an average growth rate (CAGR) of
27% over the last 3 years; the 2nd quartile
banks made of 6 banks grew at a rate (CAGR)
of 39% over the last 3 years.
Technology-driven banking boosted deposit
growth for some of the 2nd quartile banks
which may not be as widely networked
geographically.
Overall, the industrys deposit mix by
product type did not change significantly
from prior year. About 69% of deposits was
held in current and savings accounts. This
concentration has remained the same as
banks continue to seek inexpensive source of
funds. Further, few products are structured
by banks which target investments for
longer terms. With funds becoming available
from the second and third tier pension
contributions there will be a growing need to
develop products for these funds.
The top five banks per market share of
deposits accounted for 47.7% (2010: 46.7%)
of total industry deposits However, the
existence of an extensive branch network as
strategy for deposit mobilisation may be
disappearing. EBG in 2011, mobilised
GH1.7billion of deposits using a branch
network of 78, while GCB with its 157
branches (more than double that of EBG)
closed the year with a deposit balance of
GH2.1billion.
Increased competition in the banking
industry, cost some of the other banks to lose
market share . The hardest hit, included ZBL
and BOA. These banks lost 18% and 40% of
their market shares respectively. ZBLs slide

down is a result of a 3% fall in its fixed deposits. For the first time since 2000, ZBL did not
make progress in mobilising deposits.
A general uncertainty arising from changes in ownership may have impaired BOAs ability
to mobilise deposits.
CAL and UTB were among the largest gainers for 2011, increasing their market shares by
44% and 57% ,respectively.
UTBs intensive marketing and deposit mobilisation efforts over the past two years
following its consolidation with UT Financial Services Limited in 2010 yielded positive
results as the bank grew its deposits by 85% in 2011, offering attractive rates to its savings
depositors and increasing its saving deposits threefold over the last year.
CAL appears to have instilled some customer confidence following the uncertainties
arising from the boardroom wrangling. Together with improved service delivery and
introduction of new banking products and platforms including the Enhanced Transfer
Request System (ETRS) A bulk payment system for corporate clients and branch
expansion by CAL, led to a phenomenal increase in customer deposits which more than
doubled.
The latest entrant; EBL which began operations in 2011 made some inroad and ended the
year ahead of Baroda and BSIC who have remained in the bottom two over the past three
years. Baroda lost over 50% of its market share in 2011 and continued to mobilise deposits
from its one branch located in Accra.
The latest entrant; EBL which began operations in 2011 placed 24th on the
league table, ahead of Baroda and BSIC
Share of industry deposits
2011 R 2010 R 2009 R 2008 R
GCB 12.8% 1 12.5% 1 12.8% 1 14.3% 2
EBG 10.7% 2 9.5% 3 10.2% 3 8.5% 4
BBGL 9.3% 3 10.2% 2 11.7% 2 15.2% 1
SCB 9.2% 4 8.7% 4 8.6% 4 9.6% 3
Stanbic 5.7% 5 5.8% 5 6.0% 5 4.7% 5
Fidelity 5.6% 6 4.4% 8 3.0% 13 2.0% 18
ADB 5.1% 7 4.3% 9 4.3% 8 4.1% 8
NIB 4.5% 8 4.0% 10 3.4% 10 3.2% 13
SG-SSB 3.9% 9 3.9% 11 4.0% 9 3.8% 10
IBG 3.8% 10 3.3% 12 3.4% 11 3.4% 11
CAL 3.6% 11 2.3% 17 2.8% 14 2.2% 17
ZBL 3.6% 12 4.4% 7 4.8% 7 4.3% 6
UGL 3.0% 13 2.6% 15 1.9% 19 1.2% 21
UBA 2.9% 14 2.5% 16 2.0% 18 2.4% 15
PBL 2.8% 15 2.7% 14 2.6% 16 2.5% 14
TTB 2.3% 16 2.3% 19 2.3% 17 2.3% 16
UTB 2.1% 17 1.5% 21 0.8% 23 0.3% 23
BOA 1.8% 18 3.0% 13 3.1% 12 3.3% 12
HFC 1.7% 19 1.5% 20 1.4% 21 1.4% 20
GTB 1.6% 20 2.3% 18 1.8% 20 2.0% 19
ABG 1.0% 21 0.7% 24 0.2% 24 - -
ICB 0.9% 22 0.9% 23 0.9% 22 0.9% 22
FAMBL 0.8% 23 1.2% 22 2.6% 15 4.2% 7
EBL 0.7% 24 - - - - -
BSIC 0.4% 25 0.4% 25 0.1% 25 0.1% 24
Baroda 0.1% 26 0.3% 26 0.1% 26 0.0% 25
MBG - 5.2% 6 5.2% 6 4.1% 9
Industry 100.0% 100.0% 100.0% 100.0%
GCB, was pushed from
its number one position
by EBG, which increased
its market share by 45%...
Share of industry total loans and
advances.
Total industry loans and advances increased
from GH6.7billion in 2010 to GH9.1billion
in 2011 with a growth of 18% compared to a
growth of 15% from 2009 to 2010. The
growth in the economy, driven by the oil and
gas sector and related activities increased
demand for credit, which was met by the
larger and more capitalised banks in the
industry.
The industrys loan to deposit ratio dropped
from 69% in 2009 to 57% in 2011, because of
the improved liquidity banks maintained and
relatively low appetite for lending.
Lending was directed towards the mining,
services, housing and utilities. This is an
outcome of favourable economic factors as
well as Governments focus in enabling the
private sector to develop infrastructure.
Credit to the agricultural sector still lags
behind. Despite the tax concessions, the
industry is yet to overcome the peculiar
challenges in lending to smallholder growers
with limited credit history, unpredictable
weather condition and market availability.
GCB lost 60% of its market share because the
bank reduced its exposure to the public
sector by over 70% in 2011. EBG is now the
dominant lender in the market. The growth
arose from term facilities extended to
customers. It appears EBG is writing
facilities for longer terms because 62% of its
loan book is due over one year, compared to
2010 only 5% of the loan book was due over
one year.
ADB, SCB and BBGL also managed to
maintain their positions in the top five.
Stanbic joined the group as one of the key
players in the industry.
ABG grew its market share of advances almost threefold, as it closed its second full year of
operations. The banks loan portfolio in 2011 was skewed towards the utilities sector,
which accounted for over 60% of total loans.
CAL and Fidelity gained market share. Both banks have moved into the top 10 lenders,
which is to be expected as a result of the banks improvement in deposit mobilisation. The
banks portfolio concentration is in the construction, services and commerce sectors.
Notwithstanding Barodas 50% increase in market share, the bank remained in the bottom
two due to the relatively small size of its operations, as well as its low level of deposits. As
part of a group which is one of the largest banks in India and with expertise in SME
lending, there is a potential for this bank to leverage on that experience and make a
stronger presence in providing credits in the industry.
The introduction of the Credit Referencing Bureaus facilitated the lending procedures for
most banks. This is likely to ease the process of lending to SMEs , which hitherto had been
the customer group with the highest default rate for majority of the banks, despite its
growth potential. Lending is expected to increase, as the recent government programmes
on infrastructural development driven by the public private partnership is strengthened.
PwC
Share of industry loans and advances
2011 R 2010 R 2009 R 2008 R
EBG 10.3% 1 6.2% 5 8.4% 2 12.7% 2
ADB 8.2% 2 7.1% 3 7.3% 3 7.0% 4
SCB 7.2% 3 6.7% 4 6.7% 4 8.1% 3
BBGL 7.1% 4 8.2% 2 6.1% 5 6.6% 5
Stanbic 6.1% 5 3.3% 14 5.5% 6 5.5% 6
GCB 5.8% 6 14.3% 1 20.7% 1 19.2% 1
UTB 5.8% 7 4.3% 9 4.9% 7 5.1% 7
CAL 5.0% 8 4.9% 6 4.3% 9 4.3% 8
Fidelity 5.0% 9 3.7% 13 3.5% 10 3.4% 10
NIB 4.8% 10 3.9% 10 3.4% 11 3.1% 11
UGL 4.3% 11 3.9% 11 3.1% 12 2.4% 16
SG-SSB 4.2% 12 3.2% 15 3.0% 13 2.8% 14
TTB 4.1% 13 3.0% 17 2.9% 14 1.5% 18
IBG 3.9% 14 3.8% 12 2.8% 15 2.9% 13
PBL 3.5% 15 2.7% 18 2.7% 16 2.1% 17
HFC 2.6% 16 2.6% 19 2.6% 17 2.5% 15
ZBL 2.4% 17 3.1% 16 1.8% 18 1.2% 19
BOA 2.4% 18 2.0% 20 1.8% 19 0.7% 20
UBA 2.1% 19 1.4% 21 1.5% 20 3.0% 12
GTB 1.4% 20 4.5% 8 0.8% 21 0.5% 23
FAMBL 1.2% 21 1.2% 22 0.6% 22 0.7% 21
ICB 1.0% 22 0.7% 23 0.6% 23 0.5% 22
ABG 0.9% 23 0.3% 25 0.2% 24 NA
BSIC 0.5% 24 0.3% 24 0.1% 25 0.0% 24
Baroda 0.2% 25 0.1% 26 0.1% 26 0.0% 25
EBL 0.1% 26 4.7% 7 4.7% 8 4.2% 9
MBG NA NA NA NA
Industry 100.0% 100.0% 100.0% 100.0%
The introduction of the Credit Referencing Bureaus
facilitated the lending procedures for most banks
Share of industry total assets
The growth in total assets is at a slower pace.
In 2010 operating assets grew by 25%
compared to 2011, the industry achieved a
21% growth. Despite the growth in deposits
funding for assets dwindled because of the
industry suffered a 26% drop in borrowings
and earnings retained in shareholders funds.
The industrys assets are largely held in loans
and advances, which formed 39% of total
assets in 2011. Cash assets increased by 30%
from 2010, emphasising its direct
relationship with deposits which increased
by 28%. Non-operating assets increased by
a marginal rate of 2% , as most banks have
reduced their branch expansion efforts to
focus on strategies to provide quality services
to the customers.
The top five banks comprise of 46% of the
total industry assets, with GCB maintaining
its lead. However, GCB has been losing
market share since 2009 possibly as it
realigns to customer needs and implements
strategies for sustaining long term profitable
growth.
EBG was the only bank in the top five to gain
market share and go ahead of SCB. While
SCB mobilised additional GH387 million in
deposit and partly settled borrowings of
GH161 million mainly from the Standard
Chartered Bank Group, EBG was more
successful in mobilising deposits to the tune
of GH491 million and secured a net inflow
of funds from borrowings of GH 22 million.
The main source of borrowings for EBG also
came from the Ecobank Group.
Fidelity and CAL gained market share in
2011. The funding for the increase in total
assets is attributed to the strong growth in
deposit mobilised by these banks. In addition
CAL and Fidelity raised capital through
rights issue and preference shares of GH
13.9million and GH 12million ,respectively.
Although FAMBL secured GH 35 million from debt funding the growth in 2011 was
only 58% as compared with the 80% achieved in 2010.
FAMBL and BOA experienced the largest attrition to their market shares in 2011. This
is not unusual as these banks undergo ownership changes and develop strategies to
improve operations.
In addition ,the ability to mobilise deposit locally and borrow from other external
source will become a source for funding for further growth in the industry. The price at
which these funds are obtained and source will be of importance.
EBG surged past BBGL and SCB to become the second largest bank per
operating assets.
Share of industry total assets
2011 R 2010 R 2009 R 2008 R
GCB 11.6% 1 12.0% 1 13.7% 1 15.3% 1
EBG 10.1% 2 8.7% 4 9.8% 4 8.2% 4
SCB 9.3% 3 9.5% 2 10.1% 3 9.2% 3
BBGL 9.0% 4 9.4% 3 10.4% 2 12.9% 2
ADB 5.7% 5 5.8% 5 5.3% 5 5.8% 5
Stanbic 5.4% 6 5.1% 6 5.1% 6 4.3% 6
Fidelity 4.9% 7 3.7% 11 2.6% 13 2.0% 18
NIB 4.2% 8 4.1% 8 3.9% 10 3.8% 9
SG-SSB 4.0% 9 3.9% 9 4.1% 8 4.1% 8
CAL 3.7% 10 2.9% 14 3.2% 11 3.1% 13
Intercont 3.4% 11 3.1% 12 3.1% 12 2.8% 15
UTB 3.4% 12 3.0% 13 0.7% 23 0.4% 23
ZBL 3.3% 13 3.7% 10 4.0% 9 3.6% 10
TTB 2.7% 14 2.7% 15 2.2% 16 2.4% 17
UBA 2.7% 15 2.3% 19 1.9% 19 1.8% 19
UGL 2.7% 16 2.3% 20 1.6% 21 1.1% 21
PBL 2.6% 17 2.3% 18 2.4% 15 2.6% 16
GTB 2.1% 18 2.4% 16 2.0% 18 1.6% 20
HFC 2.% 19 2.1% 21 1.9% 20 3.5% 11
BOA 1.8% 20 2.4% 17 2.5% 14 2.8% 14
ABG 1.3% 21 1.1% 23 0.7% 24 - -
ICB 1.2% 22 1.2% 22 1.4% 22 1.0% 22
EBL 0.9% 23 - - - - -
FAMBL 0.9% 24 1.1% 24 2.1% 17 3.4% 12
BSIC 0.5% 25 0.4% 25 0.2% 25 0.1% 24
Baroda 0.4% 26 0.4% 26 0.1% 26 0.1% 25
MBG N/A N/A 4.6% 7 5.0% 7 4.1% 7
Industry 100.0% 100.0% 100.0% 100.0%
7
Profitability and efficiency
Profit before tax margin
The industrys profit before tax margin rose
from 27.2% in 2010 to 30.6% in 2011.This is
attributable to an 18% decline in interest
expense and a 30% increase in net fees and
commission income, compared to 2% decline
and an 18% increase in 2010, respectively.
Gross loans and advances increased by 18%
from GH 7.71 billion in 2010 to GH 9.12
billion however, interest income decreased
by 16%, compared to 2010. Interest income
declined by 9.1% from GH 2.29 billion in
2010 to GH 2.08 billion in 2011.
The downward trend in interest income and
expense is in tandem with the fall in treasury
bill rates during most part of the year. The
rates for time deposit dropped over the
period, compared to 2008-2009 with rates
ranging from 14% to 20%. In 2011 the rates
were between 6% and 9%.
As interest margins became compressed,
banks deepened diversification of their
income base to related unfunded income
transactions . Contribution of fees and
commissions as a proportion of total income
increased from 19% in 2010 to 23% in 2011.
SCB, BBG, EBG and GCB together contrib-
uted 40% of the total industry net fees and
commissions. A key factor the capacity of
these banks is their existing relationship with
larger customers and ability to leverage on
the extensive network of its correspondent
banks.
The market is experiencing extreme fluctua-
tions in interest rates and exchange rates.
Such conditions do not augur well for busi-
ness planning. To mitigate risk and exposure
from these fluctuations, customers will soon
demand risk mitigating products in the form
of derivative investments.
Baroda posted an impressive PBT, compared to FAMBL.
Profit before tax margin
2011 R 2010 R 2009 R 2008 R
Baroda 74.5% 1 28.8% 12 57.8% 1 39.5% 4
SCB 52.5% 2 46.6% 3 45.9% 3 37.4% 7
ABG 51.9% 3 54.3% 1 11.7% 15 - -
BBGL 50.7% 4 38.1% 4 -13.8% 23 -6.3% 21
EBL 48.2% 5 - - - - -
EBG 44.4% 6 49.9% 2 46.1% 2 41.9% 1
UBA 41.3% 7 29.7% 10 4.2% 21 -64.9% 24
CAL 35.3% 8 22.5% 17 28.0% 8 31.2% 13
GTB 35.2% 9 34.4% 6 43.7% 4 32.6% 12
ZBL 35.0% 10 26.0% 16 30.9% 7 40.5% 2
TTB 34.4% 11 33.5% 8 35.7% 5 35.1% 9
Stanbic 33.5% 12 29.3% 11 4.2% 20 39.9% 3
ICB 31.1% 13 34.2% 7 5.7% 19 37.5% 6
SG
-
SSB 30.7% 14 27.7% 13 31.4% 6 30.6% 14
UGL 24.9% 15 20.3% 18 12.8% 14 12.4% 20
UTB 21.9% 16 26.6% 15 -14.9% 24 -64.7% 23
ADB 21.8% 17 15.6% 20 14.4% 12 18.3% 18
PBL 21.2% 18 14.9% 21 13.4% 13 24.6% 16
HFC 20.0% 19 30.7% 9 23.8% 10 32.6% 11
Fidelity 17.9% 20 14.8% 22 9.9% 16 17.2% 19
IBG 16.1% 21 15.7% 19 15.4% 11 36.8% 8
NIB 12.7% 22 1.6% 24 -44.7% 25 -57.8% 22
GCB 10.3% 23 27.4% 14 9.8% 17 26.4% 15
BSIC 7.5% 24 -56.1% 26 -229.5% 26 -124.2% 25
FAMBL 6.1% 25 37.8% 5
-
5.9% 22 22.5% 17
BOA -38.6% 26 -51.7% 25 26.4% 9 34.5% 10
MBG NA 7.6% 23 9.7% 18 37.6% 5
Industry 30.6% 27.2% 17.7% 22.7%
Restructuring initiatives
undertaken by BBGL led to
an improved profit before
tax margin in 2011
Net trading income contributed 81% to other
income. This resulted from a significant
increase in foreign exchange transactions.
Income from foreign exchange transactions
increased by 150% compared to that in prior
year. The significant volume of transactions
witnessed during the year and the
depreciation of the cedi against the other
foreign currencies accounted for the growth
in such income.
The industrys intensified credit risk
management process from origination to
monitoring is beginning to pay off as
reflected in a decline in impairment charge
by 42% in 2011.
BSICs operating performance improved and
is now posting a profit. The bank continued
to build its loan book and generate sufficient
income to cover its operating cost.
BBGL shows the most improved operating
performance. From losses in 2008 and
2009, it returned profit in 2010 with a
PBTM of GH 85 million and further
improved to GH 115 million in 2011. The
improved profitability indicates that the
restructuring it undertook in 2008 is
beginning to yield results by reduction in
impairment charges and operating
expenses.
NIBs margin also improved from 1.6% in
2010 to 12.7% in 2011, mainly resulting
from an improvement in the credit portfo-
lio and effectively managing the deposit
rates. Net interest income grew by 48%
compared to prior year while achieving a
marginal reduction in operating expenses.
GCB and FAMBL recorded significant
decreases in PBTM. GCBs decrease is
partly attributable to a 47% increase in
operating expenses for the year. Adminis-
trative expenses more than tripled during
the year but did not achieve a rise in
income.
FAMBL net loans and advances increased
by only 3% however, interest income fell by
47% because no significant loans was
written during the year to warrant an
increase in interest income.
BOAs loss continued but improved from
PwC
the deficit of GH 16million in 2010 to
GH 13million in 2011. The uncertainties
in 2010 over change in ownership may
have taken its toll. The new ownership,
rebranding of Amalgamated Bank to
Bank of Africa and restructuring may
have had some success in 2011 but it is yet
to create a significant impact.
Baroda is the most profitable in the indus-
try but contributes only 0.5% to the overall
industry. The improved profitability is an
outcome of placing most part of the GH
35 million capital contribution during the
year in government securities. The bank s
operating model has not changed in the
last five years of existence which has been
very conservative in lending. As a subsid-
iary of one of the largest banks in India,
with a global outreach in 24 countries,
expertise with SMEs and experience in
other African countries, the bank has the
potential but is yet to establish a presence
in Ghana.
Industry Net Interest Margin (NIM) reduced from 9.3% in 2010 to 8% in 2011
mainly due to competitive pricing by banks
Net interest margin
The industry experienced a significant fall in
net interest margin (NIM) from 9.3% in 2010
to 8% in 2011, as compared to previous years
which showed an upward trend. The decline
is mainly a result of reduction in the lending
rates of banks in response to the drop in the
policy rate by the Bank of Ghana by 100 basis
points from 13.5% in 2010 to 12.5% in 2011.
The industry responded to market pressure
for re-alignment of rates to reflect
developments in the money market. Average
lending rates of banks for the year reduced
from 27.3% in 2010 to 25.9% in 2011. Rates
on demand, savings and time deposits did
not show a significant drop and reduced
marginally from 2010 to 2011.
GCB which had the highest NIM at 14.1% in
2010 saw a downturn to 9.5% in 2011.
Interest expense dropped from GH103
million in 2010 to GH50 million in 2011 but
the bank experienced a steep drop in
interest income from GH387 million in
2010 to GH256 million in 2011. The
reduction in interest income was a direct
consequence of a swap of almost 50% of its
loan book exposure to the public sector for
government bonds. Although there is greater
certainty of payments on maturity it appears
that the yield on these bonds are lower than
the yields from the converted loans.
In common with the industry trend, FAMBL,
ZBL GTB, ADB, GCB, BBGL and SCB each
witnessed a fall in the net interest margin as
net interest income declined across the
industry. The drop in interest income was
not compensated by an aggressive drive to
generate income from customer credit
because banks were keen to underwrite
quality loans for profitable growth.
Net interest margin
2011 R 2010 R 2009 R 2008 R
TTB 14.1% 1 12.6% 2 10.9% 3 10.1% 4
BSIC 13.3% 2 8.7% 12 6.6% 14 17.2% 2
UTB 12.2% 3 11.0% 4 5.9% 19 11.6% 3
HFC 10.6% 4 10.1% 8 6.3% 15 6.1% 17
SG-SSB 9.6% 5 10.4% 7 10.2% 5 9.5% 6
GCB 9.5% 6 14.1% 1 7.4% 11 9.4% 8
ICB 9.4% 7 7.9% 13 7.5% 10 7.1% 13
BBGL 9.2% 8 10.8% 5 10.2% 4 8.6% 10
SCB 8.9% 9 9.9% 9 10.0% 6 8.7% 9
Baroda 8.5% 10 4.2% 26 13.2% 1 19.4% 1
GTB 8.4% 11 9.2% 11 12.4% 2 5.5% 22
UGL 8.4% 12 6.8% 20 7.9% 9 9.6% 5
ADB 8.3% 13 12.1% 3 6.2% 18 7.2% 12
ABG 8.2% 14 10.4% 6 9.1% 8 - -
EBL 7.6% 15 - - - -
UBA 7.5% 16 7.2% 17 5.8% 20 5.2% 23
PBL 7.2% 17 7.0% 19 6.2% 17 6.6% 15
EBG 7.2% 18 7.4% 16 7.0% 13 5.8% 20
Fidelity 6.9% 19 5.7% 21 5.2% 23 3.8% 24
Stanbic 6.7% 20 7.4% 15 7.2% 12 7.5% 11
CAL 6.6% 21 7.8% 14 5.7% 21 5.7% 21
ABL 6.3% 22 5.3% 24 5.2% 24 6.6% 14
IBG 6.2% 23 5.6% 22 5.3% 22 5.8% 19
FAMBL 5.7% 24 7.1% 18 3.4% 26 3.7% 25
NIB 5.0% 25 4.3% 25 6.2% 16 6.4% 16
ZBL 3.4% 26 5.5% 23 4.7% 25 6.1% 18
MBG NA 9.4% 10 9.5% 7 9.5% 7
Industry 8.0% 9.3% 7.7% 6.6%
Restructuring activities and increased staff cost led to an increases in industry
Cost Income ratio in 2011
Cost income ratio (CIR)
Operating expenses across the industry
increased from GH1.2 billion in 2010 to
GH1.4 billion in 2011. Employee benefits is
the largest operating cost component, con-
tributing 45% (2010: 47%) to operating
expenses.
With the decline in interest margin, the
general trend in the industry among others
has been greater discipline in cost manage-
ment to reduce the cost of operations. Ulti-
mately the reduction will have a positive
impact on the cost of funds and the lending
rates. SCB, BBGL and NIB were successful
with cost reduction. The decreases were in
the area of administrative expenses.
FAMBL, ADB, GCB and BOA are at various
stages of a transformation or restructuring
to improve operating performance and
efficiency. As a consequence the banks have
incurred significant one off costs including
redundancy and rebranding to align the
business to new operating model.
BSIC recorded the most improved CIR, with
a reduction from 149% in 2010 to 84% in
2011. Over the four year period from 2008,
the start up bank has gradually become
profitable.
With the expected growth in the industry,
staff cost will continue to be key in maintain-
ing CIR because of the competitive remu-
neration to attract and retain staff. As banks
develop new products to meet their customer
needs, support in the form of technology and
expertise will increase. More so, the threat of
the weaker Ghana Cedi may aggravate the
related cost for imported services.
Cost income ratio
2011 R 2010 R 2009 R 2008 R
Baroda 0.3 1 0.5 19 0.4 1 0.6 8
SCB 0.4 2 0.5 22 0.5 3 0.6 11
ABG 0.4 3 0.4 26 0.8 20 NA
UBA 0.5 4 0.6 12 0.8 21 1.5 24
TTB 0.5 5 0.4 25 0.5 7 0.5 3
BBGL 0.5 6 0.6 11 0.8 18 0.8 20
CAL 0.5 7 0.5 17 0.6 10 0.6 14
NIB 0.5 8 0.7 6 0.8 17 0.8 19
EBL 0.5 9 - - - - - -
EBG 0.5 10 0.5 23 0.5 4 0.5 4
Stanbic 0.5 11 0.6 14 0.6 8 0.5 2
IBG 0.5 12 0.6 9 0.6 12 0.6 5
GTB 0.6 13 0.6 16 0.5 5 0.6 12
ZBL 0.6 14 0.6 13 0.5 6 0.6 6
ICB 0.6 15 0.6 10 0.7 16 0.6 13
UTB 0.6 16 0.6 15 1.2 25 0.9 23
Fidelity 0.7 17 0.7 5 0.8 22 0.8 21
SG-SSB 0.7 18 0.7 7 0.6 11 0.6 10
HFC 0.7 19 0.6 8 0.7 14 0.6 7
UGL 0.7 20 0.8 4 0.9 24 0.9 22
PBL 0.7 21 0.8 3 0.8 19 0.7 17
FAMBL 0.8 22 0.5 24 0.9 23 0.6 16
ADB 0.8 23 0.5 18 0.7 13 0.7 18
BSIC 0.8 24 1.5 1 3.2 26 2.2 25
GCB 0.9 25 0.5 20 0.7 15 0.6 15
BOA 0.9 26 0.9 2 0.6 9 0.6 9
MBG . NA 0.5 21 0.4 2 0.4 1
Industry 0.6 0.6 0.6 0.6
8
Return to shareholders
Return to shareholders
The rapid growth in shareholders funds
appears to ease as 18 of the 26 banks met
the minimum capital. In 2010,
shareholdersfunds grew by 29% and this
rate of growth fell to 19% in 2011.
Shareholders equity increased by GH 484
million in 2011 due to the combined effect of
GH 280 million capital injection and GH
204 million in the form of statutory or
reserves retained by the bank reserves.
Although net interest income dipped ,profit
after tax increased by 28% from GH 399
million in 2010 to GH 512 million in 2011.
The banks sustained profitability by growing
unfunded income and maintaining cost
discipline during the period.
Overall the industry's ROE improved from
16.6% to 17.9%. SCB, BBGL and EBG had
the highest returns for the year , in
comparison with their reported overall
groups operating performance. These
subsidiaries of multinational banks posted
very strong returns on equity;
Industry return on equity higher than ROE of key global market players
Return on equity
2011 R 2010 R 2009 R 2008 R
SCB 33.4% 1 36.8% 1 36.0% 1 37.1% 5
EBG 27.9% 2 26.8% 3 26.4% 3 41.6% 3
BBGL 26.2% 3 24.5% 4 -11.2% 23 -6.0% 21
UBA 23.8% 4 12.9% 11 1.1% 19 -82.0% 24
UTB 21.3% 5 19.4% 7 -21.1% 24 -41.2% 23
ZBL 21.3% 6 12.6% 12 16.9% 7 24.5% 12
IBG 21.0% 7 6.5% 22 14.3% 9 46.1% 1
UGL 20.6% 8 11.8% 15 12.7% 12 8.4% 19
CAL 19.7% 9 11.5% 16 15.6% 8 22.5% 13
ADB 19.0% 10 23.2% 5 10.4% 13 13.7% 18
PBL 17.5% 11 10.3% 18 13.8% 10 27.6% 9
Fidelity 17.5% 12 13.1% 10 6.4% 17 24.5% 11
Stanbic 15.9% 13 17.4% 8 1.2% 18 32.2% 7
SG-SSB 15.2% 14 16.7% 9 17.8% 5 22.3% 15
TTB 14.8% 15 11.9% 14 27.5% 2 32.5% 6
HFC 13.4% 16 10.9% 17 17.2% 6 20.8% 16
GTB 13.2% 17 12.0% 13 13.8% 11 37.7% 4
GCB 9.8% 18 22.6% 6 9.1% 16 18.2% 17
NIB 9.0% 19 3.7% 23
-
38.2% 25
-
85.2% 25
ABG 8.6% 20 9.6% 19 0.6% 21 - -
ICB 6.8% 21 7.0% 21 0.7% 20 22.4% 14
Baroda 4.1% 23 1.8% 24 10.4% 14 5.0% 20
EBL 5.7% 22 - - - - - -
BSIC 3.1% 24 -17.4% 25 -122.9% 26 -21.0% 22
FAMBL 2.0% 25 33.8% 2
-
9.5% 22 26.6% 10
BOA -
31.1% 26
-
452.5% 26 24.1% 4 29.2% 8
MBG NA 7.5% 20 10.0% 15 42.5% 2
Industry 17.9% 16.6% 10.5% 18.5%
Bank Local entity Group
Standard Chartered Bank 33.4% 12.2%
EcobankBank 27.9% 15.9%
Barclays Bank 26.2% 6.9%
The consistent favourable returns shown locally by SCB, BBGL and EBG is an outcome
of established and committed relationships with customers to sustain profitability.
(source: culled from published consolidated)
The Bank of Africa made no returns to
shareholders in the last two years because it
recorded losses of GH 13 million and
GH16 million in 2010 and 2011 respectively.
GCB and FAMBL have each suffered a steep
decline in their return to the shareholders
because they were unable to sustain the prior
years profit after tax which dropped by 70%.
The improvement in ROE and ROA over the
years did not lead to an improvement in the
dividend paid to shareholders. 30% of the
profit after tax was paid as dividend for 2009
in 2010. This dropped to 23% as dividend
paid for 2010 in 2011. With the increase in
capital, banks are setting aside a greater
amount to meet the statutory reserve
requirements. The industry will soon come
under pressure for increase in dividend as
institutional and private investors seek
returns from their investments.
In view of the threat of compression in
interest margin, care must be taken to ensure
that the banks can maintain their profit
levels without necessarily increasing interest
rates as this could stifle further credit in the
financial market.
GCB and FAMBL have suffered a steep decline in their return to the shareholders
Return on assets
2011 R 2010 R 2009 R 2008 R
BBGL 4.4% 1 3.6% 4 -1.4% 23 -0.5% 21
SCB 3.9% 2 4.3% 1 4.1% 3 3.4% 7
UBA 3.9% 3 2.3% 12 0.3% 19 -3.2% 22
TTB 3.6% 4 3.1% 7 3.6% 5 3.8% 3
ZBL 3.4% 5 1.7% 17 2.2% 7 2.5% 10
EBG 3.3% 6 3.9% 3 3.9% 4 3.9% 2
GTB 3.1% 7 2.8% 9 4.3% 2 2.2% 15
ABG 3.0% 8 4.2% 2 0.5% 18 - -
Baroda 2.9% 9 0.8% 21 5.7% 1 3.5% 6
ADB 2.8% 10 3.3% 6 1.7% 11 2.4% 11
SG-SSB 2.7% 11 2.8% 8 3.3% 6 3.6% 5
Stanbic 2.5% 12 2.2% 13 0.1% 21 3.2% 8
CAL 2.3% 13 1.8% 16 2.0% 9 2.4% 12
HFC 2.3% 14 2.1% 14 2.1% 8 1.5% 17
ICB 2.1% 15 2.4% 11 0.3% 20 3.2% 9
UGL 1.8% 16 1.2% 18 1.1% 13 1.3% 18
UTB 1.8% 17 1.9% 15 -1.5% 24 -9.1% 24
EBL 1.8% 18 - - - - -
PBL 1.5% 19 1.0% 19 1.0% 14 1.6% 16
IBG 1.1% 20 1.0% 20 1.5% 12 3.6% 4
BSIC
1.0% 21 -5.3% 26 -17.1% 26 -11.8% 25
Fidelity 0.9% 22 0.7% 22 0.6% 17 1.1% 19
NIB 0.9% 23 0.3% 24 -4.3% 25 -6.9% 23
GCB 0.7% 24 2.6% 10 0.9% 15 2.2% 14
FAMBL 0.5% 25 3.4% 5
-
0.4% 22 0.7% 20
BOA -3.5% 26 -4.0% 25 1.9% 10 2.3% 13
MBG NA 0.6% 23 0.8% 16 5.2% 1
Industry 2.4% 2.3% 1.4% 1.9%
Profit after tax has consistently improved despite the global and euro zone
crisis.
Profit after tax margin
2011 R 2010 R 2009 R 2008 R
Baroda 51.7% 1 22.9% 8 42.9% 1 31.5% 2
BBGL 36.5% 2 26.4% 4 -10.9% 23 -4.5% 21
SCB 35.7% 3 33.1% 2 31.5% 3 28.3% 5
EBL 35.3% 4 - - - - - -
ABG 33.7% 5 37.5% 1 7.1% 17
- -
ZBL 31.6% 6 17.3% 15 20.7% 8 30.6% 3
UBA 30.6% 7 19.6% 12 2.6% 20 -64.9% 23
EBG 30.3% 8 33.0% 3 34.4% 2 32.4% 1
CAL 26.3% 9 17.0% 16 22.7% 6 24.0% 12
GTB 23.3% 10 24.0% 6 31.3% 4 27.3% 9
Stanbic 22.6% 11 19.1% 13 1.3% 21 28.0% 8
TTB 22.6% 12 21.8% 9 25.3% 5 25.6% 10
SG-SSB 21.5% 13 20.0% 11 22.5% 7 21.8% 14
ADB 20.4% 14 14.9% 18 13.6% 11 18.3% 16
HFC 20.0% 15 19.1% 14 19.5% 9 23.5% 13
ICB 19.4% 16 23.7% 7 3.5% 19 28.2% 6
UGL 18.0% 17 14.1% 19 10.2% 14 9.5% 20
UTB 16.5% 18 21.7% 10 -19.0% 24 -67.2% 24
PBL 14.9% 19 10.8% 20 11.5% 13 16.3% 17
Fidelity 12.2% 20 10.5% 21 7.9% 16 15.8% 19
NIB 10.1% 21 4.0% 24 -49.1% 25 -58.5% 22
Intercont 7.6% 22 8.3% 22 12.2% 12 28.1% 7
BSIC 7.5% 23 -56.1% 26 -229.5% 26 -124.2% 25
GCB 5.8% 24 16.8% 17 9.0% 15 19.9% 15
FAMBL 4.4% 25 25.0% 5 -8.0% 22 16.0% 18
BOA -38.6% 26 -53.1% 25 19.5% 10 25.6% 11
MBG NA 4.7% 23 6.4% 18 29.0% 4
Industry 21.6% 18.3% 12.4% 16.7%
9
Asset quality
There was a remarkable
improvement in the
quality of industry
loan portfolio in 2011
primarily due to
improved credit
monitoring
The quality of industry loan portfolio in 2011 showed a remarkable improvement relative
to the same period last year. Even though gross loans and advances increased by 18% from
GH 7.7 billion 2010 to GH9.2 billion in 2011, impairment charge plummeted by 42.6%
from GH 362 million to GH 207 million over the same period.
Impairment charge as a percentage of gross loans and advances also declined from 4.7% in
2010 to 2.3% in 2011. The decline is an outcome of the deliberate attempt by management
to enhance credit administration which include origination, monitoring and aggressive
remediation for defaulting customers. The benefits of the collateral registry and credit
reference bureau introduced in prior year is beginning to emerge.
GCB, ADB, BBGL, SCB and CAL experienced a significant drop in impairment charge
during the year. In the effort to clean up the loan book these banks were very aggressive
in recognising provision for impaired loans. This has yielded positive results as these
banks further strengthened origination and monitoring of credit.
IBG, UTB, GT, BSIC and UBA suffered worse impairment charge this year. The
deterioration in the loan book of these banks is an outcome from the aggressive
underwriting they took during the start up phase. As they develop better credit history of
the market segment of their customers the quality of the loan book is likely to improve.
Impairment charge/ gross loans and advances
2011 R 2010 R 2009 R 2008 R
ADB -1.1% 1 11.8% 25 3.6% 17 1.7% 13
Baroda -0.2% 2 5.1% 22 1.0% 5 2.5% 18
SG-SSB 0.2% 3 2.0% 7 1.4% 7 2.1% 17
UGL 0.7% 4 0.2% 1 -0.3% 1 0.4% 5
EBG 0.7% 5 1.1% 4 2.0% 9 1.4% 11
BBGL 0.9% 6 3.8% 16 9.8% 25 6.0% 22
HFC 0.9% 7 1.0% 3 1.1% 6 1.6% 12
EBL 1.0% 8
- - - - - -
ABG 1.0% 9 3.4% 15 4.0% 18 - -
PBL 1.1% 10 0.7% 2 0.8% 3 0.4% 4
SCB 1.6% 11 2.7% 10 3.5% 16 0.4% 3
GCB 1.7% 12 6.3% 23 2.8% 15 0.8% 6
ZBL 1.9% 13 3.1% 12 5.2% 20 0.9% 7
CAL 2.6% 14 4.7% 19 1.5% 8 1.1% 8
ICB 2.7% 15 1.5% 5 6.2% 21 0.1% 1
BSIC 2.7% 16 1.7% 6 2.1% 11 - -
Fidelity 2.7% 17 2.7% 9 0.9% 4 0.1% 2
FAMBL 2.8% 18 3.2% 13 2.6% 13 1.1% 9
UTB 2.9% 19 2.0% 8 -0.2% 2 12.2% 23
Stanbic 3.2% 20 3.2% 14 10.9% 26 1.8% 15
GTB 4.4% 21 2.9% 11 2.0% 10 2.0% 16
NIB 4.5% 22 4.4% 18 7.9% 22 12.5% 24
TTB 4.6% 23 5.0% 20 2.4% 12 2.7% 19
UBA 5.1% 24 5.0% 21 8.6% 23 3.2% 20
BOA 7.2% 25 9.6% 24 2.7% 14 1.1% 10
IBG 8.9% 26 4.3% 17 5.0% 19 1.7% 14
MBG - NA 17.6% 26 9.6% 24 5.4% 21
Industry 2.3% 4.7% 4.4% 2.7%
10
Liquidity
Balancing liquidity to maximise profitability requires a deep strategic thought
The favourable macro economic condition of
low inflation and fall in the Monetary Policy
Committee (MPC) policy rate did not stimu-
late the expected increase in lending activity
during 2011. Overall, the industry s liquid
assets to deposits ratio fell marginally by 2%,
indicating that banks did not significantly
change their strategy over the past year. Key
players in the industry remained risk averse
and held funds in money market securities.
Baroda continues to holds significant part of
the liquid assets in Government securities.
ABGs liquid assets in Government securities
constitutes 56% of the operating assets.
Unlike previous years the bank is gradually
moving away from its conservative approach
to lending towards an increasing appetite for
investment in risky assets. This is evidenced
by a six fold growth in the banks loan portfo-
lio over the review period.
UTB dropped by 0.27 basis points, investing
in more risky assets. The growth in the loan
portfolio by 50% compared to 2010, sounds
how the bank wants to be noted as the SME
bank.
UGL and NIB continue to remain as the
least liquid banks. These two banks appeared
to be more willing to take on risks by lend-
ing, rather than placing funds in less risky
assets. Most of their lending is in the SME
sector.
GCB over the past three years has consis-
tently recorded liquidity ratios below the
industry average but saw an upward move-
ment by 0.26 basis points. This is attributed
to the conversion of the TOR debt to bonds
and also maintaining more liquidity to avoid
any challenges in meeting their funding
requirements in the short and medium term.
Liquid funds/ total deposits
2011 R 2010 R 2009 R 2008 R
Baroda 3.61 1 1.66 2 2.04 2 2.89 -
EBL 1.72 2 - - - - - -
ABG 1.13 3 1.85 1 10.29 1 - -
GTB 1.12 4 0.88 6 0.87 6 0.75 6
ICB 1.03 5 1.35 3 1.52 3 0.84 3
GCB 0.90 6 0.64 17 0.44 23 0.43 17
SCB 0.86 7 0.99 4 1.06 5 0.55 11
UBA 0.84 8 0.92 5 1.10 4 0.78 5
ZBL 0.83 9 0.65 15 0.74 9 0.69 8
BBGL 0.81 10 0.86 7 0.68 10 0.44 16
HFC 0.70 11 0.83 9 0.52 17 2.01 1
EBG 0.68 12 0.79 10 0.82 7 0.58 9
SG-SSB 0.66 13 0.68 14 0.57 16 0.41 19
Fidelity 0.65 14 0.75 11 0.59 15 0.80 4
BSIC 0.64 15 0.64 18 0.30 26 1.82 2
Stanbic 0.63 16 0.68 13 0.65 12 0.46 15
BOA 0.58 17 0.50 24 0.50 19 0.52 13
CAL 0.57 18 0.71 12 0.77 8 0.70 7
IBG 0.56 19 0.53 21 0.49 20 0.35 21
FAMBL 0.53 20 0.50 23 0.44 22 0.57 10
TTB 0.51 21 0.59 19 0.52 18 0.43 18
ADB 0.50 22 0.55 20 0.59 14 0.47 14
PBL 0.48 23 0.43 25 0.49 21 0.53 12
NIB 0.44 24 0.51 22 0.44 24 0.28 24
UTB 0.37 25 0.64 16 0.61 13 0.41 20
UGL 0.31 26 0.37 26 0.41 25 0.28 23
MBG NA 0.83 8 0.65 11 0.32 22
Industry 0.71 0.73 0.67 0.52
Balancing liquidity to maximise profitability requires a deep strategic thought
Baroda and ABG adopts a conservative approach to lending
EBG has shown a declining trend in their
liquidity over the past three years. This trend
suggests the bank is more aggressive to
lending opportunities. Relative to prior year,
the bank grew its loan portfolio by 66%
,suggesting an appetite to take on more risky
investments.
GTB has demonstrated a consistent increase
in its liquid funds to deposits. The growth in
the banks liquid assets over the period
appears to be supported by a more conserva-
tive approach to lending rather than attrac-
tiveness of returns on less risky investments.
Baroda, EBL, ABG and GTB held assets in
excess of their obligations towards interest
bearing liabilities. As new market entrants,
EBL and ABG holdings will be diluted as
investment opportunities are identified.
Baroda has maintained the same risk averse
market approach and is not expected to
change. UTB remained the most illiquid
bank in 2011.
The industry ratio of liquid funds to total
interest bearing liabilities shows a similar
growth trend compared to the trend exhib-
ited by the industry with respect to liquid
funds to total assets and liquid funds to total
deposits. The increase is at a slower pace
compared to prior year: 66.9% ( 2011) and
66.2%(2010).
Liquid funds/ total interest bearing liabilities
2011 R 2010 R 2009 R 2008 R
Baroda 292.4% 1 151.1% 2 204.2% 2 289.0% 1
EBL 141.2% 2 NA NA NA
ABG 108.6% 3 164.5% 1 595.9% 1 NA
GTB 90.8% 4 82.4% 6 86.8% 5 75.4% 5
GCB 86.4% 5 61.2% 16 34.5% 23 39.3% 18
ICB 86.2% 6 106.6% 3 112.3% 3 72.7% 6
UBA 84.3% 7 92.1% 4 109.6% 4 77.6% 4
ZBL 83.4% 8 65.2% 12 74.1% 8 68.8% 7
SCB 80.9% 9 80.4% 7 79.7% 6 53.4% 10
BBGL 80.5% 10 84.9% 5 67.0% 9 43.8% 14
EBG 64.2% 11 74.1% 9 75.8% 7 53.2% 11
BSIC 64.0% 12 63.8% 14 30.4% 26 182.0% 2
SG SSB 64.0% 13 64.9% 13 52.7% 15 36.5% 20
Fidelity 62.1% 14 69.6% 10 54.5% 13 62.1% 8
Stanbic 61.8% 15 65.8% 11 62.9% 10 43.1% 15
BOA 55.2% 16 47.9% 21 49.5% 16 51.1% 12
HFC 55.1% 17 54.7% 17 34.0% 24 123.5% 3
Intercont 54.8% 18 52.3% 19 47.2% 19 34.9% 22
FAMBL 52.2% 19 46.9% 22 42.5% 20 57.0% 9
CAL 49.2% 20 51.8% 20 58.0% 12 42.1% 16
TTB 47.4% 21 54.3% 18 48.0% 18 38.7% 19
PBL 46.1% 22 41.1% 23 41.8% 21 45.8% 13
ADB 42.1% 23 38.8% 25 48.8% 17 35.4% 21
NIB 41.5% 24 41.0% 24 32.0% 25 19.7% 25
UTB 35.4% 25 61.5% 15 60.9% 11 40.9% 17
UGL 29.8% 26 35.5% 26 40.2% 22 27.2% 24
MBG NA 76.6% 8 54.2% 14 27.4% 23
Industry 66.9% 66.2% 58.6% 47.3%
UTB and UGL take on risk by lending, rather than placing funds in less
risky assets
Liquid funds/ total assets
2011 R 2010 R 2009 R 2008 R
EBL 0.92 1 - - - - - -
Baroda 0.83 2 0.86 2 0.69 3 0.85 1
GCB 0.75 3 0.48 14 0.29 23 0.30 19
ZBL 0.69 4 0.55 12 0.63 6 0.59 6
UBA 0.68 5 0.71 3 0.81 1 0.75 2
GTB 0.67 6 0.61 10 0.55 8 0.68 3
ABG 0.67 7 0.86 1 0.77 2 -
SCB 0.65 8 0.65 7 0.64 5 0.42 12
BBGL 0.64 9 0.67 6 0.53 10 0.38 13
ICB 0.59 10 0.69 4 0.69 4 0.60 5
Fidelity 0.57 11 0.64 8 0.48 12 0.57 7
EBG 0.55 12 0.62 9 0.60 7 0.44 11
Stanbic 0.51 13 0.56 11 0.54 9 0.37 14
SG-SSB 0.49 14 0.49 13 0.38 17 0.28 20
Intercont 0.48 15 0.40 19 0.38 18 0.31 17
BOA 0.44 16 0.44 15 0.44 15 0.45 10
HFC
0.44 17 0.42 17 0.28 24 0.57 8
CAL 0.42 18 0.41 18 0.48 13 0.36 16
BSIC 0.41 19 0.42 16 0.24 26 0.66 4
PBL 0.40 20 0.36 21 0.36 20 0.37 15
NIB 0.36 21 0.35 23 0.27 25 0.17 25
FAMBL 0.36 22 0.39 20 0.38 16 0.51 9
ADB 0.35 23 0.29 25 0.34 22 0.24 22
TTB 0.33 24 0.36 22 0.37 19 0.30 18
UGL 0.26 25 0.31 24 0.35 21 0.22 24
UTB 0.18 26 0.23 26 0.48 11 0.26 21
MBG NA 0.68 5 0.47 14 0.23 23
Industry 0.54 0.52 0.47 0.38
11
Our profile
About us
PwC provides industry-focused assurance,
tax, and advisory services to build public
trust and enhance value for its clients and
their stakeholders. More than 169,000
people in 158 countries across our network
share their thinking, experience and solu-
tions to develop fresh perspectives and
practical advice.
Our key service offerings
We organise our service offerings into Lines
of Service, with highly qualified, experienced
professionals, who have industry specific
experience and focus:
Assurance providing solutions to organisa-
tions financial control, regulatory reporting,
shareholder value and technology issues
Advisory providing comprehensive finan-
cial, economic, and strategic advice to organ-
isations with complex business problems
Tax formulating effective strategies for
optimising taxes, implementing innovative
tax planning, and effectively maintaining
compliance.
Our approach to delivering these services
involves developing deep expertise and
understanding of the industries in which
our clients operate. We have established
specialised groups of consultants and
advisers covering the following key sectors:
Financial Services

Government Services

Consumer and Industrial Products and
Services

Energy and Mining

Telecoms

Infrastructure

Transport airports/aviation, seaports,
road and rail
In Africa, PwC firms have established 58
permanent offices employing more than
6,000 professional staff located in 31
countries. we believe that we are the only
professional services firm that can offer the
highest level of quality services in every
country in Africa.

From these strategically located offices, we
provide a range of professional business
advisory services to Governments,
Non-Governmental Organisations, Inter-
national Funding Institutions and leading
global and national companies.
Our permanent offices in Africa can be
found in:
In Ghana, PwC Ghana is a member firm of
PricewaterhouseCoopers International
Limited, each member firm of which is a
separate legal entity. PwCs global network
provides us with a broad resource base of
in-depth knowledge, methodologies and
experience that we use to provide value for
our clients.
PwC Ghana is located in Accra and Tako-
radi, with over 180 employees and seven
resident Partners/Directors. We offer
professional services to both the private
and public sectors in Ghana in the follow-
ing industries:
From Ghana, the firm services clients
located in or with business and develop-
ment interests in Sierra Leone, Liberia,
and The Gambia.
Part of our proud achievements include the
prominent roles we have played in sup-
porting governments to implement chal-
lenging major reform initiatives across the
continent.
For instance, we have advised on public
sector institutional restructuring and
organisational development, public sector
reform, liberalisation and privatisation of
utilities and infrastructure sectors, liberali-
sation of financial markets, and moderni-
sation of tax, customs and exchange con-
trol regimes.
Dan Mensah
Executive Secretary
4th Floor, SSNIT Tower Block
(Near Pension House) Accra
P.O.Box 41, Accra Ghana
Phone: +233 (0302) 670629
Telefax: +233 (0302) 667138
Email: assbankers@ighmail.com
Wyczynsky Ashiagbor
Partner, Advisory
0302 761465
vish.ashiagbor@gh.pwc.com
Darcy White
Partner, Tax
0302 761576
darcy.white@gh.pwc.com
George Kwatia
Partner, Tax
0302 761459
george.kwatia@gh.pwc.com
Felix Addo
Country Senior Partner
0302 761614
felix.addo@gh.pwc.com
Maxwell Darkwa
Partner, Assurance
0302 761471
maxwell.darkwa@gh.pwc.com
Oseini Amui
Partner, Assurance
0302 761449
oseini.x.amui@gh.pwc.com
Michael Asiedu-Antwi
Partner, Assurance
0302 761533
michael.asiedu-antwi@gh.pwc.com
Our leadership team
12
Glossary
Glossary of key financial terms, equations and ratios
Capital adequacy ratio is the ratio of adjusted equity base to risk adjusted asset base as required by the Bank of Ghana (BoG)
Cash assets includes cash on hand, balances with the central bank, money at call or short notice, and cheques in course of collection and
clearing
Cash ratio = (Total cash assets + Total liquid assets) / (Total assets - Net book value of fixed assets - Investments in subsidiaries and
associated companies)
Cash tax rate = Actual tax paid / Net operating income
Cost income ratio = Non-interest operating expenses / Operating income
Current ratio = (Total assets - Net book value of fixed assets Investments in subsidiaries and associated companies) / (Total liabilities -
Long term borrowings)
Dividend payout ratio = Proposed dividends / Net profit
Dividend per share = Proposed dividends / Number of ordinary shares outstanding
Earnings per share = After tax profits before proposed profits / Number of ordinary shares outstanding
Financial leverage ratio = Total assets / common equity
Liquid assets includes cash assets and assets that are relatively easier to convert to cash, e.g., investments in government securities, quoted
and unquoted debt and equity investments, equity investments in subsidiaries and associated companies
Loan loss provisions = (General and specific provisions for bad debts + Interest in suspense) / Gross loans and advances
Loan portfolio profitability = (Interest income attributable to advances - Provisions for bad and doubtful loans) / Net loans and
advances
Loan loss rate = Bad debt provisions / Average operating assets
Net book value per share = Total shareholder's funds / Number of ordinary shares outstanding
Net interest income = Total interest income - Total interest expense
Net interest margin = Net interest income / Average operating assets
Net operating income = Total operating income - Total non-interest operating expenses + Depreciation and amortisation - Loan loss
adjustment + Exceptional credits
Net operating (or intermediation) margin = [(Total interest income + Total non-interest operating revenue) / Total operating assets] -
[Total interest expense / Total interest-bearing liabilities]
Net profit = Profit before tax - Income tax expense
Net spread = (Interest income from advances / Net loans and advances) - (Interest expense on deposits / Total deposits)
Non-interest operating expenses include employee related expenses, occupancy charges or rent, depreciation and amortisation,
directors emoluments, fees for professional advice and services, publicity and marketing expenses
Non-interest operating revenue includes commissions and fees, profit on exchange, dividends from investments and other non-interest
investment income, and bank and service charges
Non-operating assets comprises net book value of fixed assets (e.g., landed property, information technology infrastructure, furniture
and equipment, vehicles) and other assets, including prepayments, sundry debtors and accounts receivable
Operating assets include cash and liquid assets, loans and advances, and any other asset that directly generates interest or fee income
Glossary of key financial terms, equations and ratios
Profit after tax margin = Profit after tax / Total operating income
Profit before tax margin = Profit after extraordinary items but before tax / Total operating income
Quick (acid test) ratio = (Total cash assets + Total liquid assets) / (Total liabilities - Long term borrowings)
Return on assets = Profit after tax / Average total assets
Return on equity = Profit after tax / Average total shareholders' funds
Shareholders' funds comprise paid-up stated capital, income surplus, statutory reserves, capital surplus or revaluation reserves
Total assets = Total operating assets + Total non-operating assets
Total debt ratio = Total liabilities / Total assets
List of abbreviations
ABG
ADB
Baroda
BBGL
BOA
BOG
BSIC
CAL
DPS
EBG
EGL
EPS
FAMBL
FBL
GCB
GDP
GTB
HFC
IBG
ICB
Access Bank (Ghana) Limited
Agricultural Development Bank Limited
Bank of Baroda Limited
Barclays Bank of Ghana Limited
Bank of Africa
Bank of Ghana
Sahel -Sahara Bank Limited
CAL Bank Limited
Dividend per share
Ecobank Ghana Limited
Energy Bank (Ghana) Limited
Earnings per share
First Atlantic Merchant Bank Limited
Fidelity Bank Limited
Ghana Commercial Bank Limited
Gross Domestic Product
Guaranty Trust Bank (Ghana) Limited
HFC Bank (Ghana) Limited
Intercontinental Bank Ghana Limited
International Commercial Bank Limited
IFRS
MBG
NIB
PAT
PBL
PBT
PwC
ROA
ROCE
ROE
SCB
SG-SSB
Stanbic
TTB
UBA
UGL
UTB
ZBL
International Financial Reporting Standards
Merchant Bank Ghana Limited
National Investment Bank Limited
Profit after tax
Prudential Bank Limited
Profit before tax
PricewaterhouseCoopers (Ghana) Limited
Return on assets
Return on capital employed
Return on equity
Standard Chartered Bank Ghana Limited
SG-SSB Bank Limited
Stanbic Bank Ghana Limited
The Trust Bank Limited
United Bank for Africa (Ghana) Limited
UniBank Ghana Limited
UT Bank Limited
Zenith Bank (Ghana) Limited
Participating banks
Name of bank
Access Bank (Ghana) Limited
Agricultural Development Bank Limited
Bank for Africa
Bank of Baroda (Ghana) Limited
Barclays Bank of Ghana Limited
BSIC (Ghana) Limited
CAL Bank Limited
Ecobank Ghana Limited
Energy Bank (Ghana) Limited
Fidelity Bank Limited
First Atlantic Merchant Bank Limited
Ghana Commercial Bank Limited
Guaranty Trust Bank (Ghana) Limited
HFC Bank Ghana Limited
International Commercial Bank Limited
Merchant Bank Ghana Limited
National Investment Bank Limited
Prudential Bank Limited
SG-SSB Bank Limited
Stanbic Bank Ghana Limited
Standard Chartered Bank Ghana Limited
UniBank (Ghana) Limited
United Bank for Africa (Ghana) Limited
UT Bank Limited
Zenith Bank (Ghana) Limited
Year of
incorporation
2008
1965
1997
2007
1917
2008
1990
1990
2010
2006
1994
1953
2004
1990
1996
1971
1963
1993
1975
1999
1896
1997
2004
1995
2005
Majority
ownership
Foreign
Local
Foreign
Foreign
Foreign
Foreign
Local
Foreign
Foreign
Local
Local
Local
Foreign
Local
Foreign
Local
Local
Local
Foreign
Foreign
Foreign
Local
Foreign
Local
Foreign
Number of
branches
31
91
20
1
92
11
18
78
3
31
7
157
22
24
17
22
27
32
45
23
35
19
32
24
26
Chief Executive Officer
(As at July 2012)
Dolapo Ogundimu
Stephen Kpordzih
Kobby Andah
Arvind Kumar
Benjamin Dabrah
Robert Kow Bentil
Frank Adu Jr.
Samuel Ashitey Adjei
Mr. Sam Ayininuola
Edward Effah
Martin Ofori
Simon Dornoo
Lekan Sanusi
Asare Akuffo
Sanjeev Anand
Joseph Tetteh
P.A. Kuranchie
Stephen Sekyere Abankwa
Gilbert Hie
Alhassan Andani
Kweku Bedu-Addo
Felix Nyarko-Pong
Oliver Alawuba
Prince K. Amoabeng
Daniel Asiedu
24 out of the 25 banks currently operating in the country participated in this years survey as listed in the table below.
pwc.com/gh
This publication has been prepared for general guidance on matters of interest only, and does not constitute
professional advice. You should not act upon the information contained in this publication without obtaining specific
professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness
of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers
(Ghana) Ltd, its members, employees and agents do not accept or assume any liability, responsibility or duty of care
for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in
this publication or for any decision based on it.
2012 PricewaterhouseCoopers (Ghana) Ltd. All rights reserved. In this document, PwC refers to
PricewaterhouseCoopers (Ghana) Ltd, which is a member firm of PricewaterhouseCoopers International Limited,
each of which is a separate legal entity.

Ghana Banking Survey 2012

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2012 Ghana Banking Survey 6 PwC

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