Graphic Business News

GRR posing challenges to banks

By: Emmanuel Bruce
 Ms Dzifa Amegashie
Ms Dzifa Amegashie

The Head of Investor Relations of the Cal Bank, Ms Dzifa Amegashie has stated that the new Ghana Reference Rate (GRR) which was introduced by the Bank of Ghana to regulate interest rates in the banking sector was posing challenges to the banks.

She said the rates set by the central bank under the new GRR system changed every month, a situation she said was creating problems for the banks in fixing their interest rates.

Ms Amegashie said this when the Cal Bank appeared before the Ghana Stock Exchange to present its facts behind the figures.

She said due to the introduction of the GRR, some clients also had the impression that the BoG had reduced interest rates to 16 per cent and ,therefore, walked into the banks demanding lower interest rates.

“This is a challenge we as bankers will have to contend with because people don’t seem to understand this very well but going forward, it’s a new thing and we are sure that it will stabilise soon,” sh

The BoG recently set its maiden GRR at 16.82 per cent.

In a public notice, the central bank indicated that the GRR will be the new module for calculating interest rates, beginning April this year.

It said the system was developed in consultation with the Ghana Association of Bankers’ re-constituted Working Group which reviewed the existing Base Rate model and developed a new framework for base rate determination.

Per the notice, the objective of the review among others was to fulfill the BoG’s commitment to move towards a more market-based model of base rate setting in the medium to long-term.

Cal Bank 2017 performance
Sharing the company’s performance for 2017, the Chief Financial Officer of the bank, Mr Philip Owiredu said the bank posted a profit after tax of GH¢145.2 million cedis.

The significant profit recorded was due to an improved operating income of 25.9 per cent and a reduction in the banks operating costs by 30.5 per cent.

The banks income, which comprises revenue from loans disbursed, charges and commissions on ATM cards as well as cheques and other services, also amounted to GH¢446.3 million cedis, up from the GH¢357 recorded in 2016.

Way forward
Touching on the way forward, the Managing Director of the bank, Mr Frank Adu Jnr, said the bank was currently on the verge of securing a US$100 million loan facility which would be invested in certain key sectors of the economy.

He said the bank would dedicate 12.5 per cent of the facility to women entrepreneurs while another 12.5 per cent would be devoted to renewable and green energy sector.

He also pointed out that the bank was currently building the foundation that would enable it to engage actively and efficiently in agency banking.

“We are building a strong distribution network and a robust platform and very soon, we will enter the market on a very strong foundation,’’ he said.

For his part, the General Manager of the GSE in charge of Finance and Administration, Mr Frank Bell, praised Cal Bank for its sterling performance over the years.

He called on other listed companies on the GSE to actively participate in the “Facts behind the Figures” programme. — GB