GT Bank withdraws from oil import financing

Guaranty Trust Bank Ghana Limited (GTBank) has cut funding to oil importers in the country in line with strategies aimed at maintaining a healthy loan book and a stronger balance sheet.

The move is in response to increasing risks in the crude oil import business which is dominated by debt-ridden bulk oil distribution companies (BDCs).

The Managing Director of the bank, Mr Olalekan Sanusi, told the GRAPHIC BUSINESS that the decision was a strategic one that could be reversed if situations in that segment of the market improved.

Although he declined to mention the time of the pull out, Mr Sanusi said it was taken after the bank’s risk management structure detected a quantum leap in the lending risks associated with financing to fuel imports.

“In prior years, we were quite heavy in financing to BDCs but because our risk management framework is very robust, it kept on picking exposures; signaling that there are going to be problems,” he said.

Exposure to crude imports

Until full deregulation took place in June, last year, imported crude was subsidised by the government for use in the local market, resulting in under recoveries by the BDCs.

These under recoveries continued to impact negatively on banks that were exposed to the companies, something GTBank is now insulated from as a result of the withdrawal.

“As we speak today, a number of banks that have exposure to the oil distributing companies are bitter although things are being worked out,” he said.

Currently, the MD said GTBank’s exposure to crude importation was zero, which he said led to the posting of “satisfactory results for 2015” in the face of turbulence for the local banking sector.

Although the bank’s 2015 results are yet to be published, Mr Sanusi said his outfit was satisfied with what it got.

Turning challenges to opportunities

Last year, businesses in the country faced one of their rough challenges, after the cedi depreciation, the power crisis and rising cost of operation combined with dampened consumer sentiments to suppress growth.

The situation had a toll on the banking sector, which contracted by negative 5.4 per cent in December, last year.

Non-performing loans (NPLs) also deteriorated by 14.9 per cent to GH¢4.52 billion in December, last year.

While admitting that the challenges were as a result of a challenged busses environment in the year under review, he said his outfit’s ability to turn opportunities into something worthwhile ensured that it was shielded from the full impact.

“Though challenging, we looked at the environment and we picked the opportunities. Lending is not essentially all that banks can do.

“To that extend, we looked at the market, picked the opportunities and we tapped them as much as we wanted to do. Having done that, the results were consistent with the level of risks we took and we are so satisfied,” he said.

The bank’s financial results are current with the Bank of Ghana for approval but the MD said it posted “very good profit.”

“Return on assets and equity is very good and consistent with what we expected,” he said

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