Market uncertainty in 2018 had adverse impact on social investments made by banks

Market uncertainty in 2018 had adverse impact on social investments made by banks
Source: Nkunimdini Asante-Antwi | Email: n.asante-antwi@metisdecisions.com
Date: 22-05-2019 Time: 09:05:16:am
Share

In 2017, over GH¢15million in Community Social Responsibility (CSR) capital was deployed by the banking sector to finance community projects.

This year, the figure is estimated to be around GH¢13 million. In assessing the CSR investments by licensed Universal banks in FY 2018, data was collected from their audited annual reports (published on their website) and other sources where available.

As at time of writing, 18, out of the 23 banks had published abridged financial reports with no data on CSR. Only 11 banks had published the full annual reports with detailed notes that contained information on CSR spending.

Figure 1 provides an infographic overview of data sources and challenges in obtaining complete information.

Due to the paucity of information, every attempt was made avoid an inter-bank comparative analysis.

The objective is to consolidate the data set around CSR in a way that allows easy tracking of the growth trajectory regarding social investment in the banking sector. In that regard, this article attempts to answer three questions; who, how much and which sector?

In terms of economic sector, majority of CSR investment in FY 2018 went to education and health as was the case in 2017, helping to spur momentum towards the achievement of Ghana’s Sustainable Development Goals. Figure 1 gives a global view of banks that were included or excluded in this analysis, and sectors that benefitted. Figure 2-6 presents rankings according to value, percentage of operating income, percentage of aggregate CSR and year-on-year comparison.


2018 CSR Premier League: GCB still in the lead, but…

Per data from the 18 reporting banks, total revenue grew by 7.9% to GH¢8,854,898,277 in FY 2018.

Prior year comparison shows that CSR Investments for the 17 banks that reported in FY 2017 amounted to GH¢15,938,755, constituting 0.18% of total revenue for those banks. In FY 2018, total CSR for the 11 banks that reported CSR data was GH¢12,021,634 constituting 0.2% of the total revenue for those eleven banks.

What does this mean? If you interpret it to mean that the banks that reported CSR data spent a relatively greater proportion of their operating income on CSR in 2018 than in 2017, you would both be right and wrong. You will be right because that’s what the data suggest. But you will be wrong because of the performance of one outlier, Zenith bank.

In 2017, Zenith spent GH¢31,133 on CSR compared to GH¢473,225 in FY 2018 (1209% growth). Indeed, Zenith and Fidelity are the only banks (among the 11 banks reporting CSR in FY 2018) that spent more in percentage terms in 2018 than in 2017.

In nominal terms however, Guaranty Trust and SG Bank, increased their CSR spending in FY 2018, albeit in percentage terms they spent less of their total revenue.

In fact, SG had GH¢0.00 recorded as CSR in 2017. GCB continue to lead with sizeable spending (FY 2018: GH¢5,622,000) as Stanbic followed unrelentingly, spending GH¢2,280,000 in FY 2018, a year-on-year contraction of GH¢210,000.

“Monkeys” to play by size indeed. The biggest spending cut came from First Atlantic Bank (see Figure 6), cutting back on their FY 2017 spending by more than 1000% to reach GH¢50,000 in FY 2018 (FY2017: GH¢739,593). CAL Bank also cut back spending, dropping from GH¢780,000 in FY 2017 to GH¢482,000 in FY 2018 (GH¢298,000 reduction).

The reductions across board could be attributed general market uncertainties, and regulatory pressures related to meeting the GH¢400 million minimum capitalization by December 2018.

CSR spending is expected to pick up in FY 2019 as sector players now have access to more loanable funds to generate alpha.

 

 

The author is the founder of Rural Heights Foundation and a managing consultant with Metis Decisions Limited, a professional services company in Accra.


Have your say  


More Business Headlines


What others are reading
The suicide survivor who was arrested at work
Landlady fined ¢2,400 after tenants poured garbage in rain
Ola faces early exit as Edinaman puts up heated NSMQ performance
Nigeria condemns attack on its embassy in London