Zenith Bank, Access Holdings Ghana Subsidiaries Escape Loss, Generate N43.97bn PBT

Kayode Tokede

After reporting loss in 2022 full financial year results due to the Government of Ghana’s bond default, two leading Nigeria’s Tier-1 Deposit Money Banks (DMBs) subsidiaries in Ghana generated N43.97billion profit before tax (PBT) for half year (H1) ended June 30, 2023.

Analysis of the banks’ results showed that Access Bank Ghana and Zenith Bank Ghana generated N34.63 billion PBT in H1 2022.

The banks’ subsidiaries in Ghana recovered from 2022FY loss to profitability amid reduction in impairment loss and growing gross earnings in H1 2023.

The two Tier-1 banks in 2022FY had reported a total of N50.07billion loss before tax from Ghana subsidiaries from N57.59 billion profit before tax reported in 2021.

In 2022, Ghana suspended payments on most of its external debts, effectively defaulting as the country struggles to plug its huge balance of payment deficit.

A breakdown of PBT generated in H1 2023 showed that Access Bank Ghana reported N21.16 billion, representing a decline of 0.30 per cent from N21.22billion reported in H1 2022, while Zenith Bank Ghana declared N22.8billion PBT, an increase of 70.16 per cent from N13.41 billion reported in H1 2022.

Access Bank said its Ghana subsidiary recorded N21.2billion PBT in H1 2023, driven by series of strategic and business actions executed to improve business performance, following the sovereign debt restructuring.

During the period under review, Ghana subsidiaries of both DMBs contributed 8.5 per cent out of the total N527.96 billion PBT generated as against 15.2 per cent out of the total N227.8billion generated in the corresponding period of 2022.

In 2022, the Government of Ghana announced the suspension of all Debt Service Payments on its External Debt, a move that was made to restore the country’s macroeconomic stability, amid the country’s economic and financial challenges.

On 5th Dec 2022, the Government of Ghana launched a voluntary Domestic Debt Exchange Programme (DDEP), an invitation for the voluntary exchange of approximately $15.99billion of existing Domestic Notes/Bonds held by various local investors, for a package of new bonds with extended payout dates and reduced coupon rates.

The DDEP was the first step of the Country’s Debt Restructuring Exercise, which was a pre-condition for a US $3billion bail-out, that the government had sought from the International Monetary Fund (IMF), due to its unsustainable debt levels (with public debt at over 100 per cent of GDP, and debt service costs absorbing 70 per cent- 100 per cent of revenues).

On February 14, 2023, Zenith Bank said it exchanged N123.6billion (GH 2,675,754,659) of its existing Government of Ghana bonds for a series of new bonds with maturity dates commencing from 2027 to 2038 under the Ghana Domestic Debt Exchange Programme.

“The new bonds were successfully settled on February 21, 2023 and have been allotted to the Central Securities Depository. The effect of the exchange on impairment of the existing bonds at 31 December 2022 was duly recognised in the consolidated financial statements,” the bank explained in its 2022 financial.

The Nigeria’s largest bank by profitability and market capitalisation, Zenith Bank reported it incurred a loss of N21.02 billion from its Ghanaian operations in 2022 from N15.38 billion reported in 2021.

For Access Holdings, the Group took an impairment of N103.10 billion in recognition of the economic loss impact of Ghana’s sovereign debt crisis (Domestic debt and Eurobonds).

“Whilst the economic loss on Ghana Domestic debt has been determined via a Domestic Debt Exchange Programme (DDE) with definite terms, unlike the DDE, the Ghanaian government has not yet presented restructuring terms for the Eurobonds.

“Though, restructuring parameters are subject to a lot of uncertainty, the possibility of further material impairment charge for this event is considered remote. The carrying amount for Ghana sovereign debts in the books of the Group amounts to N348.15billion,” the bank explained in its 2022 audited results.

Access Holding declared N32.49billion loss in its Ghana subsidiary in 2022 from N22.2 billion profit reported in 2021 financial year.