In 2017, the banking sector experienced a financial sector clean up conducted by the current government; where the nation witnessed the collapse of several banks due to their insolvency, capital inadequacy, related party transactions and several others.
Although this necessary exercise came with its own challenge (as described by the World Bank Country Director, Mr Pierre Laporte), records shows that the performance of the industry has been favorable post the event.
This report generally highlights the performance of banks in Ghana for 2021 in terms of Revenue, Profit, Customer deposit, Customer loans and return on equity (ROE).
The 2021 year’s performance showed that the banking sector was well-capitalized, solvent, liquid and profitable with improved financial sector indicators. The sector consists of 23 banks across the 16 regions of the country; however, the focus will mostly be on the top 10 performing banks for all indicators except the ROE which looks at the top 19 banks based on available data as at March 2022 (Published 2021 financials)
REVENUE:
Revenue here is the total amount of income generated by the services related to the bank’s primary operations; mostly the interest banks receive from loans given out.
For revenue, GCB led with an amount of GHS 2.39 billion which is about 23% increase from prior year, 2020. This was followed by Ecobank with a revenue of GHS 1.99 billion, a 10% rise from 2020. Absa bank Ghana followed, generating an income of GHS 1.64 billion, 17% more than they had in prior year.
The Banking industry headline revenue for the year ending 2021 grew to GHS 17.4bn representing a 14.5% growth year on year (2020 reported GHS 15.2bn). The diagram below gives the share of each bank in terms of the total banking revenue, GHS 17.4bn for 2021.
PROFIT
Like all businesses, banks profit by earning more money than what they pay in expenses. The major portion of a bank’s profit comes from the interest that it earns on its loans and the fees that it charges for its services. Its major expense is the interest paid on its liabilities.
Absa Bank Ghana registered its position as the most profitable for 2021 with a figure of GHS 1.06 billion, 55% more than they made in 2020; followed by Ecobank GHS 886 million, about 15% more than previous year and GCB coming with GHS 810 million, 35% more than 2020.
CUSTOMER DEPOSITS
In simple terms, customer deposits here will refer to the money a bank receives from a depositor. In banking, this deposit is an asset to the customer and a liability to the bank. Generally, amount of deposit available, informs the amount of loans given out.
Here, Ecobank took the lead on customer deposit with a figure GHS 14.53 billion, 13% higher than previous year, GCB followed with GHS 13.91 billion and Stanbic was next with GHS GHS 11.31 billion; 16% and 12% higher than 2020 respectively.
CUSTOMER LOANS
A Consumer Loan is a loan the banks offer to customers to finance the customers expenditure. This may be any type of loan made to a consumer by a creditor. Examples may include mortgages, personal loans, Auto loans, asset finance for appliances etc.
With customer loans, Ecobank took the lead at GHS 5.63billion, followed by Absa and Stanbic with GHS 5.30 billion and GHS 5.18 billion respectively.
RETURN ON EQUITY (ROE)
Return on equity (ROE) looks at how efficient the banks are generating profit from money that investors have put into the business. For basics, ROE is calculated by dividing net income by total shareholders’ equity. As a key indicator and very useful to investors, we look at the 19 banks based on the data available as of March 2022.
This analysis has been informed and inspired by references to existing data. It should be emphasized that any impacts are based on published 2021 financials; obtained from the banks individual official websites and/or the daily newspapers.
