UT Bank Ghana Limited is to increase its support to Small and Medium Scale Enterprises (SMEs) in the country, the Chief Executive Officer of the UT Group, Mr. Prince Kofi Amoabeng, has indicated.
“With the additional capital injection, the SME sector is to be better served. We have always believed in the SME sector. We will focus on the SMEs and extend banking services to increase the penetration of banking into the informal sector,” Mr. Amoabeng said.
He was speaking at the “Facts behind the Figures” series organised by the Ghana Stock Exchange (GSE) in Accra.
The recent capital injection in the bank by the International Finance Corporation (IFC), Mr. Amoabeng noted, is an indication that the IFC finds Ghana a good investment destination.
He said the capital injection into UT Bank will enable it to provide medium- and long-term loans for growing SMEs to help them play a critical role in the country’s oil and gas sector.
The International Finance Corporation (IFC), a member of the World Bank Group, has made a US$15million equity investment, US$5million Senior Loan and a US$10million Trade Finance Guarantee facility to the bank. It brings total capital injection in UT Bank to US$30million by the IFC.
The IFC’s 5-year Senior Loan is expected to help increase access to medium-term capital for SMEs in the country, helping them capitalise on opportunities created by strong economic growth.
The Trade Finance Guarantee Facility of US$10million will provide the bank with access to a global network of banks that will aid UT Bank finance cross-border trade transactions of SMEs.
During the 2011 financial year, the bank’s profit before tax increased by 42% from GH¢12,160,000 in 2010 to GH¢17,300,000. Its profit for the year also went up, from GH¢9,300,000 to GH¢13,065,000.
The bank opened 113,000 new accounts in the year under review. It however recorded a 1.9 percent increase in its Non Performing Loans (NPLs), from 12 percent in 2010 to 13.9 percent.
The Deputy Managing Director of the UT Bank, Mrs. Pearl Esua-Mensah, attributed the increase in NPLs to increased short-term loan disbursements. Out of the GH¢408 million of loans disbursed during the 2011 financial year, SMEs and corporate organisations received 56 and 44 percent respectively.
Mrs. Esua-Mensah expressed optimism that the bank’s fortunes will continue to improve — and positively affect the banks stock value — as a result of the firm foundations laid last year.
The bank also significantly increased its net fees and commission by 300 percent from GH¢4,561,000 in 2010 to GH¢18,607,000.
Part of the constraints facing the private sector in the country is access to medium- and long-term loans. While the private sector has been touted as the engine of growth, some contend that it has not received the needed support to build a thriving and vibrant sector.
By Dominick Andoh
