In a challenging financial quarter, Agricultural Development Bank (ADB) reported a significant decline in net profit, with Q3 2023 figures showing a mere GHS 2 million compared to the GHS 41.8 million net profit in the same period the previous year. This represents a staggering GHS 39.8 million drop in net profit on a year-on-year basis.
Despite showing growth in net interest income and operating income, standing at GHS 397 million and GHS 621 million, respectively, the bank struggled with a myriad of issues, ultimately impacting its profitability.
Personnel expenses, impairments on loans and advances, as well as financial assets and other expenses, were identified as key factors contributing to the drastic decline in net profit year-on-year.
ADB’s assets saw notable growth, surging from GHS 7.1 billion in Q3 2022 to GHS 9.3 billion in Q3 2023, indicating a substantial GHS 2.2 billion increase in asset value over the year.
Driving this asset surge was primarily the expansion of the bank’s investment securities, which grew from GHS 1.5 billion to GHS 2.2 billion within the review period. Loans and advances to customers stood at GHS 3.8 billion, while cash and cash balances amounted to GHS 2.3 billion.
The bank’s liabilities also saw significant growth, reaching GHS 8.6 billion in Q3 2023, compared to GHS 6.1 billion in Q3 2022. Deposits from customers contributed substantially to this increase, reaching GHS 7.7 billion at the end of Q3 2023, up from GHS 5.2 billion in Q3 2022.
ADB’s loan asset quality raised concerns, with the non-performing loan (NPL) ratio climbing to a troubling 34% in Q3 2023, up from 25% in Q3 2022. This escalation in NPL ratio indicates a heightened risk of loan defaults.
The bank’s Capital Adequacy Ratio (CAR) plummeted to a mere 1.3% at the close of Q3 2023, marking a substantial decline from the 10.4% CAR recorded in Q3 2022. This CAR level is significantly below the industry’s average CAR of 14%, raising red flags about the bank’s capital adequacy.