SCB’S YTD return retreats with decline In its q1-2018 earnings

On the Ghana stock exchange

SCB’s profit after tax in Q1-2018 contracted by 3%, falling to GHS 80.8 million from GHS 83.6 million in Q1-2017. The decline in its profits resulted from an increase in its operating expenses by 8% from GHS 54.88 million in Q1-2018 to GHS 59.35 million in Q1-2018 and an increase in impairment on financial assets from GHS 12.11 million in Q1-2017 to GHS 13.36 million in Q1-2018. 

SCB’s net interest income and non-interest incomes grew by 1.6% and 52% respectively. The company’s return on equity declined from 10% in Q1-2017 to 8% in Q1-2018. SCB’s earnings per share also fell to GHS 0.69 in Q1-2018 from GHS 0.71 the same period last year.

SCB reported an increase in its non-performing loan ratio, which rose from 42.76% in Q1-2017 to 46.25% to Q1-2018 pointing a decline in the quality of its credit portfolio. The level of credit risk remains significantly high and management must focus on collections and recoveries of past due and non-performing loans while continuously improving its risk management processes to ensure that this risk is minimized. Loans and advances to customers fell to GHS 1.29 billion in Q1-2018 from 1.31 billion in Q1-2017 which may reflect management’s efforts to reduce its loan origination in the bid to curtail the rising levels of credit risk.  Deposits from customers increased to GHS 3.95 billion in Q1-2017 from GHS 3.33 billion in Q1-2017.

The company’s solvency also declined with its capital adequacy ratio also falling from 32.28% in Q1-2017 to 27.85% in Q1-2018. SCB has rewarded investors with a YTD return of 33.58%. It has shed off GHS 0.33 in the past two weeks. Looking forward, GN analysts are optimistic that the bank will grow its earnings in the subsequent months anchoring on its historical financial performance and the positive growth forecast for the Ghanaian economy. Any claw backs in SCB’s share price will be influenced by its earnings report in the subsequent quarters.

Trading activity on the local bourse ended on a negative note with the Composite index and the Financial stock index losing 32.19 points and 30.8 points to peg at a YTD return of 32.7% and 36.25% respectively. There were 2 gainers (GCB & PZC) and 3 losers (SCB, GOIL & CAL). GCB topped the charts in terms of volumes as 72,800 shares worth GHS 467,392 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 depreciated marginally against the Dollar, the British Pound and the Euro at the end of yesterday’s trade. The local currency exchanged at a mid-rate of GHS 4.4131 to the USD, GHS 5.9991 to the GBP and GHS 5.2811 to the EURO at the end of yesterday’s trade. The GCFM Cedi index, a measure of the holistic performance of the Cedi on the interbank market now records a year-to-date appreciation of 0.02%.



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