Ratings agency, Fitch, has assigned Guaranty Trust Bank Ghana a Long-Term Issuer Default Rating of 'B' with a stable outlook.
The ratings consider the concentration of its operations in the challenging operating environment, its small market shares, high credit concentrations and ambitious growth strategy.
However, these considerations are balanced against the bank’s healthy asset quality and strong profitability, capitalisation and liquidity coverage.
Fitch said GT Bank Ghana has small market shares of assets and customer deposits (both 3% at end-2020) but its franchise benefits from being a subsidiary of Guaranty Trust Bank PLC (GTB PLC), Nigeria's fifth-largest banking group.
“Market shares are expected to increase moderately over the next three years as GTB Ghana grows faster than the sector average with the objective of becoming a systemically important bank. However, this target is challenging due to the bank's current market position and Ghana's highly competitive banking sector”, it continued.
It further said “single-borrower credit concentration is high, with the bank's 20-largest loans representing 83% of gross loans at end-2020.”
However, these 20 largest exposures represented just 87% of total equity, reflecting GT Bank Ghana's large capital base and a low share of loans in total assets.
The ratings agency said “our risk appetite assessment also considers strong loan growth in recent years, driven by corporate lending that we expect to continue and may lead to pressure on asset quality in the event of a relaxation of underwriting standards.”
Bad loans
Fitch said GT Bank Ghana's impaired loans ratio is significantly lower than the banking sector average of 15.3% at the end of February 2021.
The percentage of gross loans benefitting from restructured terms as a result of the covid-19 pandemic declined to 1% at the end of the first quarter of 2021, from 14% at the end of 2020 as a result of a few large exposures.
“Our asset-quality assessment also considers the bank's small loan book (27% of total assets at end of quarter one) and large holdings of Ghanaian government securities (B/Stable; 51% of total assets at end-2020), it added.
Latest Stories
-
CAF Confederation Cup: ‘Ghanaians should expect victory against Stade Malien’ – Dreams FC forward Ishmael Dede
23 mins -
CAF Confederation Cup: ‘We want to go there and win’ – Karim Zito on Stade Malian clash
49 mins -
Togbe Adzie Lãkle Howusu XII endorses youth leadership as New Force Movement gains momentum
1 hour -
Public Utility Workers Union appeals to PURC to address power crisis
2 hours -
Anbariya loses another appeal in Kumasi as Appeal Court ratifies High Court ruling against the Islamic Institute
2 hours -
Highway construction health hazard: Ofankor-Pokuase-Nsawam residents appeal for dust relief
2 hours -
SuperJazzClub releases its first single of the year ‘Off’
2 hours -
Methodist Church to lobby Akufo-Addo for expedited assent to anti-LGBTQI+ Bill
2 hours -
Spare health facilities from unplanned ‘dumsor’ – Minority to government
2 hours -
Eritrea Observed World Tuberculosis (TB) Day 2024
3 hours -
Just give us ‘dumsor’ timetable to plan our operations – GMA tells ECG
3 hours -
Parliament petitions Chief Justice for an expedited hearing of cases against anti-LGBTQI+ Bill
3 hours -
The Attorney General vs NDC impasse – why they ‘fight’
4 hours -
High Court orders teacher unions to end strike
4 hours -
‘He worked with all staff irrespective of their status’ – GRA hails Dr Ammishaddai
4 hours