"The first three months were particularly challenging, with the bank recording a GHS 28million loss during that period. "
These times do not appear to be the best for UT Bank, a bank that not too long ago, was the pride of most Ghanaians as an indigenous financial institution that was finally going to stay.
Despite the great promise they started with as a savings and loans company with their mantra “A loan in 48 hours”, an addition of a bank has not fared the institution very well especially in this first half of 2015.
Much suggests that the Bank may have bitten more than it can chew with the addition of subsidiaries more than it can support. In a space of about two years, the bank added UT Bank, an SME bank to what used to be a savings and loans company Unique Trust, it also added UT holdings, UT logistics, UT Life Insurance and also moved overseas with UT International.
The Bank in the past year or so, has seen its profit margins dwindle and with it its share prices.
UT Bank Ltd, reported a GHS 30.6million loss in the first half of this year largely on account of high interest expenses which negatively impacted its results and dampened the positive effects of interest income that recorded a strong growth of 30% during the period.
Total deposits increased by 29% from GHS 889million to GHS 1.2billion while total assets increased by 44% from GHS 1.4billion to GHS 2billion. The asset growth was driven mainly by the sharp cedi depreciation during the first half of the year.
Commenting on the company’s performance, Prince Kofi Amoabeng, CEO of UT Bank Ltd stated “The year 2015 has been very challenging for the bank as the tough macro economic conditions and the protracted energy crisis continue to negatively affect the operations and performance of the business sector especially our core segment, the SMEs. The first three months were particularly challenging, with the bank recording a GHS 28million loss during that period.
We have since witnessed a vast improvement, as the results of the implementation of our turnaround plan kick in. In the second quarter, from April to June, we recorded a GHS 2.4million loss, 91% better than recorded in the first quarter, and in the Month of June recorded a GHC 1.3 million profit after tax”.
He added that “We are not blaming it on the economy, because if you look at the banking industry some banks have made very good profit.
We are all in the same environment but our target markets were hit most by these things [power outages, depreciation of the cedi, high interest rates] -- part of the bad performance we want to accept ourselves,” the UT Bank boss said.
According to Mr. Amoabeng, the bank has analysed what went wrong, and its turnaround strategy is built around the challenges it faced.
“Our turnaround project is two-tiered with a broader plan of business transformation aimed at better-positioning UT Bank to withstand external shocks, and a narrower plan that addresses, directly, the internal challenges we have identified as a business.
“The strategic plan is actually taking effect, that’s why the losses have gone down. We have a plan that has looked at very important areas.
There’s a general one, which is looking at the structures and the whole UT bank. When you are not doing well, we have some obvious things that are expected. For example, we had to look at cost-cutting; we have done aggressive cost-cutting. We have also intensified loan recovery.