Republic Bank Ghana has reported an increase in its total assets value for the period ending December 2022, with the figure growing to GHS 5.08bn from GHS 4.22bn in the previous year, an impressive growth of 20.3%. This remarkable growth can be attributed to the rise in the bank’s cash and cash equivalents which increased from GHS 946m in 2021 to GHS 1.75bn in 2022.
However, as much as the increase in the bank’s total assets value is laudable, there is cause for concern as the bank’s liabilities also recorded an increment. The bank’s liabilities rose from GHS 3.53bn in 2021 to GHS 4.41bn in 2022, an increase of GHS 882m. Driving this increase in liabilities was deposits from customers, which amounted to GHS 4.09bn in 2022, compared to the previous year’s figure of GHS 3.16bn.
While the bank’s liquidity ratio remains very strong, recording a liquidity ratio of 146.7% at the end of December 2022, it is worrisome to note that the bank’s loan asset quality has deteriorated. The bank’s non-performing loans grew from 15.3% in 2021 to 19.8% in 2022, indicating that the bank’s loan portfolio has some weakness.
Furthermore, the bank’s Capital Adequacy Ratio (CAR) fell from 27.6% in 2021 to 21.2% in 2022, which is also cause for concern. It is important to note, however, that despite the decline in the bank’s CAR, it remains well above the regulatory minimum CAR requirement of 10%.
Republic Bank Ghana will need to carefully analyze its loan portfolio to reduce the level of non-performing loans in order to improve its asset quality. Additionally, the bank will need to find a way to increase its CAR to a more acceptable level to mitigate any potential risk. With the bank’s liquidity ratio remaining strong, it has the potential to weather the storm.
Republic Bank Ghana’s impressive growth in its total assets value is marred by the increase in its liabilities and the deterioration of its loan asset quality. The bank must address these issues to avoid further damage to its financial standing.
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Source: norvanreports.com