StanChart 2015 performance down on macroeconomic challenges
Standard Chartered Bank Ghana says negative economic developments in the local and global markets had led to lower than expected performance in 2015.
In its full year 2015 result released on Thursday, the bank said it recorded an underlying operating income of GH¢531 million, representing a two per cent growth over the previous year.
However, the bank’s operating profit declined by 67 per cent to GH¢91million.
“Our results are below expectation relative to our initial 2015 projections,” the bank said in a statement.
It attributed the low performance to the volatility experienced on global commodity and currency markets, Ghana’s macroeconomic difficulties and the energy crisis.
“The year 2015 is on record in Ghana as one of the most challenging and exceptional years on many fronts. The volatility experienced on global commodity and currency markets, coupled with Ghana’s macroeconomic headwinds and three consecutive years of an energy crisis had a material adverse impact on business,” it said.
Standard Chartered Bank said it had, during 2015, made very exceptional and unprecedented loan impairment provisions of GH¢213 million, up 333 per cent from 2014 largely on account of the effects of a massive disruption to working capital cycles across almost all sectors in the Ghanaian economy.
It said: “Naturally, the bank was as disappointed with the 2015 operating results as our stakeholders would be due to the material deviation from our consistently good performance over the last decade.”
Commenting on the 2015 operating results, the Chief Executive Officer of Standard Chartered Bank Ghana Limited, Mr Kweku Bedu-Addo, said: “The nature of these shocks in Ghana have been both cyclical and structural and have persisted for the last three years. We started picking early warning signals in 2013 and the stressed operating environment unfortunately intensified over time.
“As expected, within difficult operating environments, a lot of businesses would have stressed cash flow which undermines debt repayment capacity across most sectors in the economy.
“Under prudential and regulatory guidelines we are obliged to take loan impairments on distressed assets. What this means is that we will pursue a dual strategy of recovery and restructuring within the new cash flow realities.”
However, Mr Bedu-Addo said the bank’s decisions on profit retention in prior years since 2013 had given the bank a balance sheet that had been able to withstand the severe and unprecedented shocks to the business operating environment in Ghana.
This, he said, enabled the bank to focus on achieving a quick rebound of the business as a more benign operating environment returns.
“The focus for 2016 is to continue to invest in technology, improve the customer experience and to introduce innovative products onto the market,” he said.
Mr Bedu- Addo said the bank would deliver its medium term strategy through disciplined execution and efficient cost management.
“We remain proud of our record of consistently stellar operating results over an extended period of time and we are confident that we will restore the business to an attractive growth trajectory once more over the medium term, in line with market expectations,” Mr Bedu-Addo said.
Source: GNA