HFC Defers Cross Border Investments

HFC Bank has deferred cross border investment indefinitely until it completes the re-organization exercise. The bank is implementing a new plan to transform the financial intermediary into a holding company with four major subsidiaries that will focuse on banking, investment management, private equity and real estate. At its Annual General Meeting (AGM) last week, Asare Akuffo, Managing Director of the bank, said the objectives of the proposed exercise was to improve efficiency and profitability through shared services, improvement in corporate governance and risk assessment for each subsidiary. Meanwhile, shareholders of the bank approved a resolution to allow it buy back up to five percent of issued share capital to support the share price. This will be put into treasury securities. It will help the directors to open share deals account for the purpose. Mr. Akuffo said the move would help the financial institution to intervene at the appropriate time to prop up the share price when it declines below its fair market value. The bank, he said, would also sell some of its holdings when share prices are good. HFC Bank posted a net profit of GH˘8.64 million in 2010 from GH˘5.75 million in 2009, representing 49.7 per cent growth. Interest income rose by 10.6 percent to GH˘54.42 million in 2010 from GH˘49.20 million, while the mortgage portfolio grew by 15.9 per cent to GH˘57.58 million in 2010, up from GH˘51.85 million in 2009. This was on account of the Public Sector Workers Housing Scheme. Deposits also shot up by 27.5 per cent to GH˘156.53 million, leading to a significant increase in the amount of low cost deposits in the bank’s deposit mix. Mr. Akuffo expressed the hope that improvement in the macro-economic environment would spur growth policies and business activity. He however said although management expected margins to be lower in 2011 due to competitive pressures and the general reduction in interest rates, growth in the bank’s assets, expansion in other business areas and cost control would compensate for the downward pressure on earnings.