Latest 2016FY audited accounts for HFC Bank (HFC) show that the listed bank continues to under-perform among its industry peers. High risk exposure during the 52 weeks period contributed to the dwindling fundamentals of the company.
Although Interest Income over the one year period increased by 9.93%; from GHS 251,081,000 in 2015FY to 276,012,000 in 2016FY, a 37.57% increase in interest expense resulted in a 12.94% dip in net interest income for the period. Net Interest Income fell from GHS 137,409,000 in 2015 to GHS 119,629,000 in 2016. Although the bank remained profitable in its core business, a 57.02% dip in trade income coupled with an 11.62% fall in total operating Income resulted in the bank recording losses once gain for another full year. Loss for the 2016 period was GHS 38,606,000, which was a marginally rise from the loss of GHS 39,241,000 in 2015FY.
Return on Equity (ROE) increased from 1.39% in 2015 to 1.96% in 2016. Return on Assets [ROA] however fell from 16.03% in 2015 to 14.86% in 2016. This clearly indicates that the bank failed to efficiently utilize company resources [assets] to maximize returns for stakeholders. Borrowings made by the bank during the period increased by 47.02% to GHS 41,845,000. Although deposits from other banks remained flat during the one year period, deposits from customers significantly increased by 31.00%; from GHS 1,189,454,000 to GHS 1,558,210,000. The size of the bank’s loan book over the period increased marginally by 0.06%. The negligible growth rate of the loans book was as a result of the bank’s conservative approach in issuing loans in order to shield the loan portfolio from further credit losses. Non Performing Loans (NPL) ratio increased marginally from 20.35% to 21.75% over the 52-weeks period.
Losses recorded during the period could negatively impact the possibility of dividend payments. GN Analysts anticipate that the dip in company fundamentals will further negatively impact the share performance of HFC on the local bourse. YTD market return on the equity is currently pegged at -13.33%; with a high possibility of the stock recording further losses in the short term. The bank however remains a going concern on the back of a strong capital and liquidity position, factors that should mitigate the growing concern among investors holding HFC shares. With two consecutive years of recording losses from operations, investors are likely to pull funds out of HFC bank in the short term.
Trading activity on the bourse ended with 4 gainers (GCB, GOIL, SCB and UTB) and 2 losers (CAL & SOGEGH) yesterday. SOGEGH topped the trading chart in terms of volume as 2,000,200 shares worth GHS 1,520,157.00 changed hands. Returns on the Composite and Financial Stock Index pegged at 11.83% and 16.38% respectively.
Trading activity on the Alternative market ended yesterday with 1,300 shares of Intravenous Infusions Limited (IIL) valued at GHS 117.00 changing hands.
HORDS currently lead record capital gains on the GAX, appreciating by 25% from 2016 year open.
The Cedi GAINED marginally to all the major trading currencies yesterday.
The local currency exchanged at a mid-rate of GHS 4.3369 to the USD, GHS 5.3799 to the GBP and GHS 4.6612 to the EURO.
The GCFM Cedi index, a measure of the holistic performance of the Cedi on the inter-bank market now records a year-to-date depreciation of 3.85%.
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