Pan African rating agency, GCR Ratings ("GCR") has affirmed
The ratings on
The ratings also factor in improving capitalisation and improving asset quality risk.
According to GCR, the bank's competitive position is strong, with a cost of funds of less than 2 per cent, benefiting from being part of the broader
ETI is a pan-African conglomerate with banking operations spanning over 33 countries.
The bank's revenue is stable, supported by a healthy internal capital generation of 29 per cent in FY21(FY20:35 per cent).
Total operating revenue grew from 985m in
The growth was mainly driven by net interest income and general banking fees.
The cost-to-income ratio stood at 46 per cent in
However, the bank's CAR ratio dipped to 16 per cent in
The GCR capital ratio is expected to be around 20 per cent by the end of the year.
Although the bank's asset quality has come under pressure due to the COVID-19 pandemic, the NPL ratio improved from 8 per cent at
However, 20 per cent of the Non-Performing Loans have been restructured as certain sectors were hit hard by the pandemic, namely construction, real estate, and hospitality sectors.
The bank's gross loan and advances increased from 5.3billion in 2020 to 6.2 billion in 2021 with loan loss reserves of 531.3million
"We expect the cost of risk to remain below 10 per cent within the short to medium-term. Concomitantly, the bank's credit losses have registered at moderate levels of below 5 per cent historically, and we expect them to remain the same in the next 12-18 months. Foreign currency (FCY) loans accounted for 31.9 per cent of gross loans and advances in 2022 (FY20: 34.6 per cent), with most of the facilities extended to the manufacturing sector, constituting 19.2 per cent of the bank's loan book", GCR said.
"We also note the rising risk of the Ghanaian sovereign. In the unanticipated event of a sovereign default and haircut of local currency government debt, there could be significant capital erosion across the banking sector. Positively, sovereign debt accounts for 12.3 per cent of total assets for
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