ADB Achieves Impressive Results Under New Management
The Agricultural Development Bank (ADB) today released its financial results for the 2010 financial year, reporting a significantly improved performance in profits, returns on assets and equity and key balance sheet indicators.
Profits grew by 162.2% to reach GH¢33.2 million. This translated into a significant jump in the returns on assets and equity ratios from 1.8% and 10.9% in 2009 to 3.3% and 23.2% respectively in 2010. Earnings per share thereby increased by more than 122.6% from GH¢0.597 in 2009 to GH¢1.329 at the end of December 2010. On the strength of the strong profit out-turn, the Directors declared a dividend payment of 30% or almost GH¢10.0 million to the shareholders.
The balance sheet was significantly strengthened as the total assets of the bank increased by 36.9% from GH¢734.6 million in 2009 to GH¢1,005.9 million at the end of 2010. This represented an increase in the market share of total banking industry assets from 5.2% in 2009 to 5.8% in December 2010. Loans and advances recorded a significant increase of 54.7% from GH¢372.9 million in 2009 to GH¢576.9 million and constituted 57.4% of the total assets of the Bank. Total deposits amounted to GH¢536.1 million and represented an increase of 26.1% from GH¢425.1 million in 2009. The networth of the bank similarly improved by 17.8% as Shareholders’ Funds increased to GH¢143.2 million.
At the back of the stronger balance sheet, the bank recorded significant improvement in terms of assets quality, as the non-performing loan ratio dropped from 19.5% at the end of 2009 to 11.8% at the end of 2010. This signaled the prudent management of the Bank’s credit portfolio as a result of the restructuring of its credit management function.
The strong profit performance enabled the Bank to increase its National Stabilization Levy payments from GH¢0.7 million in 2009 to GH¢1.8 million in 2010. The Bank continued its social responsibility engagements and spent a total of GH¢605,725.00 in 2010 as against GH¢492,140.00 in the previous year. It sponsored its trade mark National Best Farmer Award Project and made several other donations to charity during the year.
In its core business of agricultural financing, lending to the agricultural sector reached GH¢174.2 million in 2010 from GH¢105.3 million in 2009 and represented an increase of 64.5%. This increased agriculture’s share of the Bank’s credit portfolio from 24.1% in 2009 to 28.9% in 2010 and put the Bank clearly in the stead of re-discovering its founding mission. These together have helped in repositioning the Bank as a policy-led agricultural financing institution and enabled it to win the Agricultural Development Bank of the Year in Africa award at the maiden Africa Investor Agribusiness Awards held in Durban, South Africa.
ADB was established in 1965 to promote and modernize the agricultural sector and allied activities through financial intermediation. It has since then operated as a state-owned enterprise. In its current shareholding structure, the Government holds a 51.8% stake, while the Bank of Ghana, through its Financial Investment Trust (FIT) holds the remaining 48.2% shares.
Currently, ADB operates under the Universal Banking License. Its scope of operations therefore covers all areas of banking, including retail, corporate, SME and agricultural and agri-business financing.
In January 2010, ADB launched a three-year strategic plan to reposition it as a highly efficient policy-led agricultural financing institution of choice as well as deepen its role as a universal bank. The plan has introduced a new policy direction, organizational structure, business model and transformation of business processes. The Bank pursued a massive branch network expansion programme which added 12 new locations to its branch network during the year. These locations are in largely rural, agriculturally-active communities and corridors and commercial centers within areas with vast potentials for agricultural production.
The Bank is also engaged in upgrading its IT infrastructures, systems and processes to improve customer turn-around time and enhance the quality and efficiency of its customer service delivery. It complemented its agricultural financing products with a number of new retail, corporate and e-banking products and services in 2010.
The Bank has re-discovered its potential as a result of the transformational strategic initiatives it implemented last year and is poised to offer greater competitiveness to the banking marketplace.