DDEP bites hard on ARB Apex, Rural Community Banks

Ghana’s economy in the last few months has seen several changes, including the completion of the Domestic Debt Exchange Programme (DDEP).

Now, banks are beginning to bear the brunt of the DDEP as they release their financial statements. The latest casualty of the DDEP is the ARB Apex Bank, which suffered a whopping GH₵1.10 billion loss.

This was disclosed by Mr Alex Kwasi Awuah, the Managing Director of ARB Apex Bank, during the 37th Annual General Meeting of Weto Rural Bank.

Addressing the gathering, Mr Awuah expressed the gravity of the situation, stating that “As you are all aware, ARB Apex Bank and the RCBs took a hit of more than GHS 1.10 billion in the recently completed Domestic Debt Exchange Programme (DDEP)”.

Mr. Alex Kwasi Awuah acknowledged the imperative of devising effective strategies to ensure the continued growth and sustainability of these banks, given the ongoing economic challenges that the country faces.

Despite these challenges, the Managing Director of ARB Apex Bank emphasized the vital role of technology in the modern banking sector. He revealed that the long-anticipated Agency, Mobile, and Internet Banking project is on the horizon, with Point of Sale (PoS) devices already procured and delivered to the country.

Mr Alex Kwasi Awuah disclosed that two esteemed project consultants are scheduled to arrive in the country to facilitate the Train-the-Trainer and User Acceptance Workshop, paving the way for the first phase of the project – the implementation of the USSD Banking Solution.

Proactive Approach

Mr. Awuah also urged the management of Weto Rural Bank to adopt a more proactive approach, highlighting the untapped potential for small, medium, and individual enterprise development in Kpeve and its surroundings. He appealed to the bank’s directors and shareholders to increase their investments, enabling the bank’s management to engage customers with confidence.

The Board Chairman of Weto Rural Bank, Mr. Sebastian K. Atsrim, on his part, disclosed that dividends totaling GHS 100,000.00 for the year 2022 were approved for distribution, equivalent to GHS 0.00209 per share. This, he said, marked a significant development, as dividends have not been disbursed since 2019 due to the bank’s strategy of building reserves and adhering to a regulatory directive from the Bank of Ghana (BoG).

Amidst these financial fluctuations, Weto Rural Bank experienced a 38% decline in Profit Before Tax (PBT), with figures dropping from GHS 829,886 in 2021 to GHS 512,490 in the financial year 2022. However, shareholders praised the bank for its support, citing assistance in the form of loans for education, agricultural ventures, and investments in local small and medium businesses.

Meanwhile, as banks release their financial statement, one factor that has been identified as a major contributor to these losses is the Domestic Debt Exchange Programme, which has impacted negatively on their profitability position.

The DDEP was introduced in 2022 by the government of Ghana as a way to manage the country’s domestic debt. Under the program, holders of government securities were given the option to exchange their bonds for longer-term bonds with marginal interest rates. This move was aimed at reducing the government’s debt servicing costs and improving its debt sustainability.