Citizens Rural Bank commended for sustained deposit mobilization

The Nsawam-based Citizens Rural Bank Limited in the Akwapim South Municipality has been commended for its splendid and consistent deposit mobilization, having recorded a total deposit of GH¢675,753.00 in 2010, as against GH¢368,719.00 in 2009 to indicate an 83.3 per cent increase.

Its total assets rose from GH¢909,590.00 in 2010 as against GH¢506,174.00 in 2009, representing 79.7 per cent increase, while total loans also increased from GH¢201,021 in 2009 to GH¢359,091.00 in 2010, showing an increase of 74.7 per cent.

In a message to the second Annual General Meeting (AGM) of the bank at Nsawam, Mr Eric Osei-Bonsu, Managing Director (MD) of ARB Apex Bank Limited noted that competition in the banking industry was normal and inevitable.

He commended the Bank for its consistency in deposit mobilization, especially as it was “A young bank rubbing shoulders with the giants”, and advised rural and community banks (RCBs) to consider cooperative mergers in order to remain in business.

The Managing Director observed that managing credit schemes was a skill practised for long and that its techniques constantly kept changing in respect of the needs of the business, resulting in high rates of defaults by credit beneficiaries which affected operating profits and thereby necessitating quality credit management.

He stated that the financial strength of any business organisation depended on efficient acquisition and management of its resources by those who had responsibility and authority to control the use of those resources and accounting for them accordingly.

Mr Osei-Bonsu said the degree of effectiveness of management control over the use of resources depended on the quality, relevance and timeliness of information available to management, adding that the business world had changed so dramatically that there was an increasing pressure on managers and employees alike to integrate new information technology into all aspects of the organisation’s operations for improved effectiveness, efficiency and customer satisfaction.

The Chairman of the Bank’s Board of directors, Mr Frederick Djan Frempong, announced that the Bank made a loss of GH¢41,416.48 in the year ended 2010, as against a loss of GH¢26.589.00 the previous year (2009).

He indicated that shareholders’ funds reduced by 86.2 per cent from GH¢127.925 in 2009 to GH¢17.638 in 2010, and explained that the reduction was due to interest rate even though the bank made significant improvement in the investment and loan portfolios.

Speaking to the Ghana News Agency shortly after the shareholders meeting, the Manager of the Bank, Mr Victor Yeboah Nkansah explained part of the statutory obligations of banks and stated that “portfolio regulation” was to prohibit those who managed banks from taking excessive risks in their financial decisions.

“To achieve this purpose, the banking laws have imposed on banks statutory duties aimed at controlling the capital structure, investments and liabilities of banks.”

When asked why the bank could not offer dividends to its shareholders in the 2010 operational year, Mr Nkansah replied that it was also an obligation under Section 8 of the Banking Act 1970, under Sub-regulation 3 (3) of LI 1389, that no payment of dividend shall be made by a bank to its shareholders, until the bank had completely recovered all its capitalised expenditure.

Mr Nkansah said the Bank’s transactions were within its powers coupled with the relevant provisions of the Banking Act 2004 (Act 673) as amended by the Banking Amendment Act 2007 (Act 738).

He cited depreciation of the Ghana cedi against major currencies, inflation, prime rate and economic activities in the catchment area, coupled with stiff competition in the banking industry as some of the factors hindering the operations of the Bank.

Source: GNA

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