Trust Bank records a successful financial performance in 2010

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The Chairman of Trust Bank Gambia Limited (TBL) Mr. Ken Ofori-Atta has disclosed that the Bank recorded an increase in profit from D64.9 million to 69.8million in 2010.

This profit was gained after tax increased by eight percent, he said during the Bank’s annual general meeting (AGM) at the Kairaba Beach Hotel on Wednesday.

He explained that dividends per share increase by 11 percent from 90 bututs to 100 bututs; shareholders funds increase by four percent from D218 million to D290 million; Loans and advances grew by 23 percent from D1.1 billion to 2.9 billion; deposits grew by 17 percent from D2.4 billion to 2.9 billion; and total assets increased by 16 percent from D2.9 billion to D3.4 billion.

Mr. Ofori-Atta said the Bank’s track record for delivering strong results in spite of adversity remains intact and these results are testimony to the quality and strength of the management and staff of the Bank.

“As at end 2010, the Bank held around 26 percent of deposits mobilized in the industry and around 25 percent of credit facilities extended. Considering that there were 14 Banks operating in the industry during this time and that customer loyalties are diffused and switching costs in the industry are relatively low,” he said.

“This is surely a major accomplishment and a testimony of the trust and loyalty of our customers and all other stakeholders and shareholders.”

However, he said the growth in the balance sheet at this time is especially gratifying and a source of immense pride and continued hope that “Trust Bank will continue to be the bank that always leads the way for others to fellow”.

Difficult year

2010 could be seen as a difficult year for many financial institutions in the country with an increasing hike in food and fuel prices; a lingering economic crisis, leading to a low economic performance in many countries including The Gambia.

Banks (like Oceanic) and other financial institutions closed down, after failing to meet the Central Bank’s demands for banks to increase their share per capital from D60 million to D150 million in 2010. This will be increased to D200 million by the end of 2012.

Regardless of the hurdle, Mr. Ofori-Atta revealed that “the Bank has remained profitable and financially strong and that one of the greatest strengths of the aptly named “Trust Bank” has been the “trust” and “confidence” that it enjoys from its stakeholders.

“The Bank Stakeholders’ have remained firmly positive and supportive of the Bank’s business and hence its ability to continue to deliver such relatively strong results. TBL will continue its reputation for financial soundness, customer services, proactive management, innovation and corporate social responsibility are as alive today as ever,” he said.  

Banking Industry

As Mr. Ken Ofori-Atta explains, the arrival of Zenith Bank in the first quarter of 2010 brought the number of banks to 14, doubling the number of banks operating in the country in just three years.

According to IMF mid 2010 report, while the increased number of banks helped to fuel a deepening of financial intermediation, it also heralded intense competition among the 14 banks in such a small market of 1.7 million people.

And Mr. Ofori-Atta said there has been increased lending in both public and private sectors as a result of the competition, however, he said it led to increased risks and non-performing Loans (NPLs) to the banking system.

“The loan books of banks have consequently showed unprecedented levels of impairment and require an urgent need for balance sheets to be cleaned up. The intense competition has also resulted in a sharp rise in the cost of deposits and staff remuneration,” he said.

“All of these have combined to amplify the pressure on banks’ earnings. The total earning for the banking sector as a whole was negative in 2009, provision for loan losses increased and the level of non performing loans also increased.”

Nonetheless, he noted that the capital adequacy ratio of 19 percent indicated that the banking sector was still adequately capitalized, this still represented a massive drop from the preceding years and the aggregate percentage masked a wide dispersion across banks.

He commended the Central Bank of The Gambia (CBG) for taking steps to mitigate emerging risks in the industry and policy measures introduced in the past few years, including the introduction of the Credit Reference Bureau; the prompt corrective action (PCA) framework; and the augmentation of share capital which 13 of the14 banks fulfilled in the 2010 capital augmentation deadline.

Economic Environment

For Mr. Ofori-Atta, much continues to be written about the global economic downturn though most economies are now showing signs of recovery as the sharp fall in global trade, uncertainly and loss of confidence in the global financial infrastructure are all gradually diminishing.

According to the International Monetary Fund (IMF), the world’s low income economies coped much better during this global crisis than was expected, and Mr. Ofori-Atta noted that the reason is that most of these countries entered the crisis with low inflation, manageable fiscal and current account deficits, higher international reserves and lower debt than in previous downturns.

This also gave such economies more room to maneuver to enable fiscal automatic stabilizers to operate. Low income countries should once again restore fiscal space and rebuild reserves without compromising the critical need for continued and robust growth, he said.

He said: “The Gambia, like most income counties held up well during the crisis although sharp drops in tourism and remittances were recorded. During the period of the crisis, growth remained steady at about 5 percent compared to the average of 6 percent recorded in the preceding periods. Inflation also remained in single digits.”

He quoted economic analysts to have said: “A rebound in agriculture greatly helped to cushion the impact of the sharp drops in tourism and remittances and also helped to out pace growth in many other counties in the sub-region.” Source – The Voice