(Updates with analyst comment from third paragraph)
Oct. 28 (Bloomberg) -- Ghana Commercial Bank Ltd., the West African nation’s largest lender, posted a 7 percent increase in profit for the nine months to Sept. 30 as impairment charges declined.
Net income climbed to 38.3 million cedis ($24 million) from 35.8 million cedis a year earlier, the Accra-based bank said in a statement published in the Daily Graphic newspaper today. Net interest income, the money banks make from loans, declined to 156.4 million cedis from 219.9 million cedis, the lender said.
“The bank could not grow interest income because it reduced loan advances, probably to cut down on bad loans,” Randy Mensah, a stock analyst at Accra-based Databank Financial Services Ltd., said by phone today. Impairment charges on loans and advances dropped to 4.4 million cedis in the period, “from as high as 71.9 million cedis the same period last year,” Mensah said.
In 2010, the Ghanaian government sold bonds to pay off debt owed to the lender by Tema Oil Refinery Ltd., the country’s state-owned crude processor. In March, the lender said 572 million cedis had been paid off, amounting to 90 percent of the debt, according to African Alliance Securities Ltd.
Ghana Commercial, whose largest shareholder is the country’s state pension fund with about 30 percent, is “trying to reposition itself” and continue to cut the charges for non- performing loans, Mensah said. “Once they are reduced and internal structures are put in place to check further increases, the bank will be able to grow deposits and resume increased advances.”
Ghana Commercial’s loans and advances to customers decreased 95 percent to 450 million cedis while deposits rose 29 percent to 1.8 billion cedis, according to the statement. The stock was unchanged at 2.03 cedis by 2:17 p.m. Accra time.
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