Edward Ato Sarpong
The Agricultural Development Bank (ADB) is targeting an annual profit of GH¢1 billion as it begins the next phase of its growth strategy, focusing on improving staff productivity, strengthening operational structures and reducing its non-performing loans (NPL) ratio to 45 percent by the end of this year.
The Managing Director of ADB, Edward Ato Sarpong, disclosed this in an interview with the media on the sidelines of the joint National Executive Council (NEC) meeting of the Agricultural Development Bank Professional and Management Staff Union and the Local Union in Accra.
He said the strategy would build on efforts made over the past two years to stabilise the bank’s operations and improve profitability, with a renewed focus on human capital, credit risk management and income diversification.
Mr. Sarpong said ADB had the capacity to generate GH¢1 billion in profit but needed to improve productivity and ensure that its human and financial resources delivered better results.
“We believe that we are a one billion profit bank. But at the moment, we are doing just about 400 million. We have solved the market problem, we have solved the industry problem, what we need to resolve is the structural problem. And that’s what we are working on,” he said.
He explained that the bank’s immediate priority was to align its ownership, board, management, employees, regulator and customers within an integrated framework to support its growth ambitions.
He identified human capital as a critical factor in achieving the bank’s objectives, noting that although ADB had made progress in stabilising its operations over the past two years, more effort was required to improve productivity and position it among high-performing banks.
He said management would continue to engage employees on its plans, strengthen collaboration and motivate staff to improve performance.
Mr. Sarpong said the bank was also reviewing the productivity of its assets, systems and digital platforms to ensure that investments translated into higher income, greater operational efficiency and an improved customer experience.
He said ADB needed to compete effectively with other financial institutions rather than rely on its status as a state-owned bank.
On asset quality, he said the bank’s NPL ratio, which stood at approximately 75 percent, was declining as management intensified efforts to recover outstanding debts and re-engage customers.
He also disclosed that the bank is targeting a reduction in the ratio to between 40 and 45 percent by the end of this year, with a further reduction to the regulatory threshold of 10 percent planned for next year.
“From what we have put in place, I believe that by the end of this year, we would have reduced our NPL to just about 40, 45 percent. And next year, we’ll tackle getting from that 40 percent to 10 percent,” he said.
He stressed that despite being state-owned, ADB would operate with the competitive mindset of a private bank, independently attracting customers and expanding its market share.
Beyond improving productivity and reducing bad loans, Mr. Sarpong said ADB was exploring new income streams to sustain profitability amid declining interest rates.
He explained that banks could no longer depend heavily on investing mobilised deposits in Treasury bills to generate returns, making it necessary to explore alternative lending opportunities, services and strategic partnerships.
He added that the bank had introduced a new risk framework and credit structure to strengthen lending decisions and reduce the risk of loan defaults.
By Ebenezer K. Amponsah