Amenfiman Rural Bank has revealed plans to increase its capital base to GH¢5 million by next year.
The Board and Management of the rural bank said the long-term goal is to get a solid base of GH¢10 million in anticipation of growth in the sector and demands by the central bank.
The bank is one of the few rural banks that has met Bank of Ghana’s minimum capital requirement with a current capital level at GH¢2.3 million.
Chief Executive Officer of Amenfiman Rural Bank, Dr Alexander Asmah, says the move is in anticipation of a further increase in recapitalisation requirement by the regulator. The raising of capital requirement for commercial universal banks by more than 300 per cent calls for a review of the bank’s stated capital.
At the 34th Annual General Meeting, the bank said it will raise the capital levels before any potential directive for a statutory increase in capital. As a first step, it is encouraging existing shareholders to increase their share values before any potential investors from another source actually come in.
“The bank has attracted a lot of attention from the investing public including institutional investors some of who continue to express interest in equity participation but we believe that it is most appropriate to encourage existing shareholders to increase their respective capital contributions,” he said.
To achieve this ambitious target, Dr. Asmah says the bank is convincing its shareholders to convert their dividends into shares.
Due to the aggressive expansion program embarked upon for the growth and prosperity of the business in the medium to long-term, coupled with the high cost of doing business, profitability dipped during the year under review.
That notwithstanding, a dividend of 0.060 Ghana Cedis per share was proposed though it was increased to 0.050 per share last year.
“We are excited to note that the current dividend of 0.060 per share is still a 30 per cent return on shareholders’ investment considering a share price of 0.20 per share,” said the Board Chairman, Dr Tony Aubynn.
Effect of 25% corporate tax on profit
The profit after tax for the year was GH¢5,132,875 as against GH¢8,892,746 representing a decline of 42 per cent.
This was due to a higher tax rate of 25 per cent applied for the first time and other adjusting entries made during the year.
It still maintained its position as the most profitable rural and community bank in Ghana.
As part of the strategy to increase shareholder value, the bank opened up four new branches during the year and also extended access to credit and savings to most parts of the rural communities.
As a rural bank, mobilising customer deposits was a critical part of the objectives for the year 2017.
Total deposit for the bank grew from 128.8 million Ghana Cedis in 2016 to 148.8 million cedis representing a growth of 15.5 per cent.
The board and management are exploring Agency Banking as a strategy to reach out to more depositors as a means of expanding financial access and inclusion, especially to the rural communities.
The year under review saw total assets growth of 15 per cent 158.7 million Ghana Cedis in 2016 to 182.7 million Ghana Cedis in 2017.
The growth was supported by aggressive deposit mobilisation, growth in loans and advances and investments.
Shareholders’ funds also grew from 23.1 million in 2016 to 25.6 million in 2017 representing 11.07 per cent.
Rural agric financing
The bank continued to invest the significant amount of the money in farming activities and rural enterprises.
More than twelve million Ghana Cedis worth of credit support was given to Medium, Small and Micro Enterprises (MSMEs) and farmers especially coca farmers within the rural communities.
In all, a total loan amount of 70 million Ghana Cedis was disbursed during the year 2017.
This is helping to boost economic activities and development in the catchment communities.
With the level of investment made last year, the future looks great for the shareholders of this great bank.
Dr. Aubynn says the next phase is to grow digitally using the appropriate digital financial services platform by reaching more customers using various ICT platforms.
The bank has successfully installed ATMs in seven locations and it is still exploring the opportunities to expand ATMs.
Corporate social responsibility
At the 33rd annual general meeting, members of the bank approved the board’s proposal to establish the Amenfi State University College, a higher education project for the people of Wasa Amenfi.
The project has received tremendous endorsement by the people and chiefs where paramount Chief -Wasa Amenfi Manhene, Tetrete Okuamoah Sekyim the second, has already allocated land for the project.
The Board has committed to devote 8 per cent of annual profits after tax towards the fulfilment of this vision.
The sod cutting and commencement of the project has been scheduled to coincide the Wasa Amenfi Afahye in September 2018
Meanwhile, a total of GH¢159,000 Ghana Cedi was spent on various corporate social responsibility projects during the year under review.
Managing Director, ARB APEX BANK, Kojo Mattah, has applauded the efforts by the bank to protect customers with the initiatives.
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