GCB says profit dip result of lower interest income and high operational cost

Accra, June 1, GNA - Ghana Commercial Bank's 65 per cent fall in net profit was due to a combination of lower interest income and higher operational cost, the bank's Managing Director Simon Dornoo, said in Accra on Friday.

He said expenses during the period included significant one-off costs associated with the transformation of the bank, including staff restructuring cost and write-down of balances held in the bank's books to their recoverable amounts.

“The decline in interest income was anticipated and the direct result of the restructuring of the Tema Oil Refinery loan into a lower yielding investment instrument,” Mr Dornoo told journalists during a briefing on the bank's performance last year.

However, Mr Dornoo said the full impact of the lower interest and higher cost was offset by a significant drop in loan impairment.

The impairment cost dropped from a restated 70.93 million cedis to 10.65 million cedis.

The bank reported that its net profit for the 12 months to December 2011 fell nearly 65 per cent to 17.972 million cedis from a restated 50.880 million cedis in 2010, while net interest income slides nearly 28 per cent to 206.812 million in the same period.

“The dip you observed is of a short-term nature and does not reflect the fundamentals of the bank,” Mr Dornoo said, adding that first quarter results showed that the bank was on track.

“I would like to note that these are headline results and that the underlying performance is strong as borne out by our Q1 2012 results,” he said.

The bank's net profit for the three months to March rose 18 per cent to 23.384 million cedis from 19.764 million cedis a year ago.

It said net interest income for the first quarter rose to 58.373 million cedis from 54.273 million cedis, representing 7.5 per cent growth.

Mr Dornoo said the bank would be seeking more volumes by tapping into the personal loan segment.

GNA