adb’s earnings shrink in Q2-2018

adb in Q2-2018 raked in a profit of GHS 20.56 million, approximately 59% lower than the profit of GHS 49.87 million reported in Q2-2018.

A review of its earnings report shows that the decline in its profit after tax in this period was driven in part by a decline in net interest income and a rise in operating expenses and net impairment loss on financial assets. adb’s net interest income fell to GHS 137.48 million in Q2-2018 from GHS 157 million in Q2-2017. Net impairment loss on financial assets increased by 53% in Q2-2018 from GHS 8.59 million in Q2-2017 to GHS 13.18 million. The bank’s earnings per share fell to GHS 0.09 in Q2-2018 from GHS 0.22 in Q2-2017.

In terms of cost efficiency, ADB’s cost-to-income ratio increased to 83% in Q2-2018 from 69% in Q2-2017. The bank’s operating expenses rose to GHS 161.02 million in Q2-2018 from GHS141.91 million in Q2-2017. adb’s non-performing loan ratio increased from 41.34% in Q2-2017 to 42.16% in Q2-2018 signaling some deterioration in the quality of its loan portfolio. The bank’s loan portfolio shrunk by 6.96% in Q2-2018. adb is expected to concentrate its efforts on recovering past due and non-performing loans in the bid to minimize credit risk. The bank’s capital adequacy ratio at the end of Q2-2018 stood at 15.92%.

 

In terms of share price performance, adb has recorded a capital gain of 1.88% despite the decline in its earnings in both Q1-2018 and Q2-2018. adb’s share price is likely to continue to be stable at its current price in the short-term as the market looks out for the bank’s strategy to meet the minimum capital requirement.

 

The composite index and the financial stocks index fell by 10.28 points and 11.46 points to peg at a YTD return of 11.60% and 15.50% respectively. There were 4 losers [SOGEGH, GOIL, SPL & ETI] and 1 gainer [CAL]. ALW topped the charts in terms of volumes as 193,600 shares worth GHS 13,552 changed hands.

 

On the Ghana Alternative Market

 

Trading activity on the Ghana Alternative Market was hushed as no shares changed hands.

 

On the Currency market

 

The Cedi appreciated marginally against the British Pound and the Euro but lost to the Dollar at the end of yesterday’s trade. The local currency exchanged at a mid-rate of GHS 4.7268 to the USD, GHS 6.0647 to the GBP and GHS 5.4675 to the EURO. The GCFM Cedi index, a measure of the holistic performance of the Cedi on the interbank market now records a year-to-date depreciation of 4.93%.

 

 

By GN RESEARCH

On the Ghana Stock Exchange

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