NIB Rediscovers Position
Ghana's premier development bank, the National Investment Bank (NIB) is gradually rediscovering its position within the banking arena as the bank moves from losses to profitability.
The bank over the past two years have posted negative returns on its operational activities due to various factors, notably among them was poor risk management on facilities extended to its clients and customers and poor loan recovery.
The bank posted an after-tax profit of GH¢2,424 million for the year ended December 3, 2010 compared with a net loss of GH¢28,574 million in December 31, 2008. In December 2009, the bank posted a net loss of GH¢23,113 million.
The net profits between 2006 and 2007 was nothing to write home about as the net profit of the bank stood at GH¢4,423 million in 2006 and GH¢5,074 in 2007.
However with a major policy changed in 2009, the bank was able to be on its feet to rise above board.
The bank undertook major developments policies which included staff rationalisation, establishment of an Asset Recovery Company in which nearly GH¢220million of the bank’s bad loans were transferred to the company with the aim of speeding up the recovery process.
The bank has also set in motion a process that will lead to the preparation of an investor memorandum aimed at raising new capital to the tune of US$125 million. This is however subject to the approval of the Ministry of Finance and Economic Planning as the government is the majority shareholder.
From a net profit of GH¢2,424 million recorded in 2010 the bank was able to raise its profit levels to GH¢7,582 million this represents more than 300 per cent growth from the 2010 figure with an indication of doubling its net profit at the end of the 2012 financial year.
The bank posted a net interest income of GH¢40,401 million in 2011 representing more than 65 per cent growth from the previous year’s figure of GH¢27,228 million. Total deposits gradually increased from GH¢33.7 million in 2009 to GH¢498.8 million in 2010 and took a further upward drive to GH¢722.8 million. Total assets of the bank have gradually appreciated from the 2009 levels of GH¢543.6 million to GH¢878.8 million at the close of 2011 financial year.
This is the first time in more than five years the bank has recorded such a phenomenal profit, after years of dwindling fortunes, which saw the near collapse of the bank.
The last time the bank paid dividends to the government, which is the biggest shareholder, was in 2006 when the bank presented a cheque of GH¢1.4 million to government.
The government owns about 50 million shares, representing 86 per cent of the total shares of the bank. The 2006-year was the first full year of the bank operations under its 2006 to 2008 strategic plan.
According to the bank’s annual report for 2010, in spite of the competition and falling interest rates, the bank managed to achieve satisfactory results.
The report further stated that the completion of the capitalisation of the bank through private placement would provide the needed capital muscle to enable it to participate effectively in the emerging lucrative business including the oil and gas industry. It would also enable the bank leverage on its competitive advantage in the booming construction industry in the country.
The Managing Director of the bank, Dr P. A. Kuranchie, attributed the sterling performance of the bank to the stringent measures taken by management to reposition the bank on the path of solvency and profitability.
He said management would focus on its loan recovery drive for this year while at the same time attracting high net customers to the bank.
NIB was established in March 22, 1963, as the first development bank in the country to promote and strengthen rapid industrialisation in all sectors of the Ghanaian economy.
With the advent of converting all banks to universal banks, the bank changed its status from a development bank to a commercial bank.
The bank now operates as a universal bank with focus on development/commercial banking activities.
NIB Ltd. has undergone series of management, institutional and financial restructuring, which has strengthened the organisation and now has 29 branches nationwide.
The bank has played a leading role in developing a number of highly successful industrial projects in the country, through equity and debt financing. Some of these are Nestle Ghana Ltd., Nexans Kabelmetal (Ghana) Ltd., Merchant Bank (Ghana) Ltd. and Total Ghana Ltd.