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12.06.2007 Business & Finance

Market Records Heavy Trade In GCB Rights Issue

Ghana Commercial Bank (GCB) rights issue recorded a heavy trade at the opening of this week's business activities at the Ghana Stock Exchange.

A total of 28,534,500 shares were traded at ¢565 per share

The rights issue which opened on May 15 will close to the general public on Friday June 15, this year.

The issue offers 75 million shares at ¢6,000 per share in a ratio of one new share to every 2.2 existing share being held by shareholders of the bank.

In the event of oversubscription, the bank will issue an additional 25 million ordinary shares valued at ¢150 billion to raise the offer to ¢600 billion. Any excess amount received will, however, be refunded to applicants.

The offer is opened to both existing and non-existing shareholders. Under the terms of the offer, all shareholders registered in the books of GCB at the close of business on Tuesday, April 10 2007 were qualified to participant in the offer.

The offer is the second such opportunity to the public and its shareholders to take owership holdings in Ghana's premier indigenous bank.

The initial public offer was in 1996 when the bank offered shares to the public and got listed on the Ghana Stock Exchange (GSE).

Currently, the government holds about 34 per cent in GCB shares with the rest being held by individuals and other institutional investors.On completion of the rights issue, GCB will become one of the most heavily capitalised banks on the GSE.

Since its inception, the bank has played a leading role in the country's economy providing support for the cocoa industry, the petroleum industry as well as small- and medium-scale enterprises (SMEs).

Over the past five years, total assets of the bank have increased by 68 per cent, deposits by 163 per cent and loans and advances by 282 per cent. Profit before tax also grew by 39 per cent during the same period under review, while shareholders have equally had their share of the profit of the bank since it went public 11 years ago.

Till 2001 when the bank recorded an impressive performance, the operating performance of the bank went through a number of cycles. The bank posted ¢167.974 billion profit after tax and 151 per cent increment on net interest income as compared to the 95 per cent recorded the previous year.

This was attributed to the bank's restructuring of its assets in favour of loans and advances and overnight money market operations.

Another impressive performance was posted in 2002. The bank's profit after tax again went up from ¢167.974 billion in 2001 to ¢174.4 billion in 2002, representing a three per cent increase.

At the close of the 2004 financial year, GCB's profit after tax made a turnaround and went up to ¢165 billion, representing a 76.7 per cent appreciation only to drop by 21.8 per cent to ¢129 billion in 2005, but recovered quickly in the 2006 financial year with a profit after tax of ¢260.15 billion, recording a 101 per cent increase over 2005.

This performance has affected the bank's dividend payment over the years. Just as the profit after tax (PAT), GCB's dividend also experienced mixed growth over the years. It moved up from ¢100 in 1998 to ¢250 in 2000 and ¢400 declared for 2001. In 2002, GCB declared ¢500 per share as against the ¢400 per share paid the previous year.

In 2003, it managed to declare a dividend of ¢250 per share amidst difficulties, amounting to ¢41.25 billion. In 2004, GCB increased its dividend pay out to ¢375 per share then up again to ¢400 per share in 2005 and ¢550 in 2006.

The bank's strategic focus is to consolidate its retail banking and to reposition itself with respect to the development of SMEs to large corporate entities.

The bank currently has more than 369 corporate accounts of not less than ¢15 billion as capital.

The share offer is therefore to support and drive the strategy in areas such as system and processes, inject additional working capital into the operations of the bank, development of capacity of its workforce, open and rebrand branches to create the necessary environment for customers and clients alike.

GCB's stock market performance over the past years had been remarkable. The bank's share price has appreciated steadily from ¢701 per share in 1996 to present day ¢6,798, representing a year to date gain of 9.53 per cent.

Story by Lloyd Evans