By Kofi AHOVI
Shareholders of HFC Bank, last week approved a resolution to allow the bank to buy back up to 5% of issued share capital to support the share price. The approval also authorizes directors to open share deals account for the purpose.
Asare Akuffo, managing director of the bank, explained at the bank’s Annual General Meeting held in Accra, that 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 would also sell some of its holdings when share prices are good,” he added.
Earlier speaking at the facts behind the figures on the Ghana Stock Exchange (GSE), a platform created by the exchange for listed companies to interact with analyst, brokers among others, Akuffo expressed dissatisfaction with the current price of the bank’s stock on the GSE.
HFC’s share price stayed flat from 2008 to 2009 at GH¢0.62 after rising from GH¢0.54 in 2007. Currently the share is going for GH¢0.40 dropping from GH¢0.44 in 2010.
The MD asked the analyst if they could provide any meaningful explanation to the current status of the company’s share even though the company is recording impressive performance.
According to him, return on equity for HFC was 12% in 2010, while that of its peers including CAL Bank, SG-SSB and UT were 12%, 4% and 12% respectively. Furthermore the book value per share of HFC is GH¢0.39 at the end of 2010 while that it CAL Bank, SG-SSB and UT were GH¢0.05, GH¢0.35 and GH¢0.02 respectively.
“I therefore do not understand why our price to book value should be very low compared to our peers on the market, analyst you have to explain to the world what we are doing wrong or not doing,” Akuffo questioned.
The price to book value of HFC’s share is GH¢1.13 but CAL Bank is GH¢6.6, SG-SSB is GH¢1.82 and UT is GH¢14.5.
HFC Bank posted a net profit of GH¢8.64 million from GH¢5.75 million, representing 49.7% growth.
Interest income rose by 10.6% to GH¢54.42 million from GH¢49.20 million while the mortgage portfolio grew by 15.9% to GH¢57.58 million in 2010, up from GH¢51.85 million in 2009, on account of the Public Sector Workers Housing Scheme.
Deposits went up by 27.5% to GH¢156.53 million, leading to a significant increase in the amount of low cost deposits in the bank's deposit mix.
Akuffo expressed the hope that improvement in the macroeconomic environment would spur growth policies and business activity.
He 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.
The Bank's Board Chairman, Nana Agyei Duku, said the financial institution would position itself to take advantage of the opportunities presented by the improved economy by reorganizing itself to deliver higher returns from all its business segments.
Shareholders of HFC Bank, last week approved a resolution to allow the bank to buy back up to 5% of issued share capital to support the share price. The approval also authorizes directors to open share deals account for the purpose.
Asare Akuffo, managing director of the bank, explained at the bank’s Annual General Meeting held in Accra, that 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 would also sell some of its holdings when share prices are good,” he added.
Earlier speaking at the facts behind the figures on the Ghana Stock Exchange (GSE), a platform created by the exchange for listed companies to interact with analyst, brokers among others, Akuffo expressed dissatisfaction with the current price of the bank’s stock on the GSE.
HFC’s share price stayed flat from 2008 to 2009 at GH¢0.62 after rising from GH¢0.54 in 2007. Currently the share is going for GH¢0.40 dropping from GH¢0.44 in 2010.
The MD asked the analyst if they could provide any meaningful explanation to the current status of the company’s share even though the company is recording impressive performance.
According to him, return on equity for HFC was 12% in 2010, while that of its peers including CAL Bank, SG-SSB and UT were 12%, 4% and 12% respectively. Furthermore the book value per share of HFC is GH¢0.39 at the end of 2010 while that it CAL Bank, SG-SSB and UT were GH¢0.05, GH¢0.35 and GH¢0.02 respectively.
“I therefore do not understand why our price to book value should be very low compared to our peers on the market, analyst you have to explain to the world what we are doing wrong or not doing,” Akuffo questioned.
The price to book value of HFC’s share is GH¢1.13 but CAL Bank is GH¢6.6, SG-SSB is GH¢1.82 and UT is GH¢14.5.
HFC Bank posted a net profit of GH¢8.64 million from GH¢5.75 million, representing 49.7% growth.
Interest income rose by 10.6% to GH¢54.42 million from GH¢49.20 million while the mortgage portfolio grew by 15.9% to GH¢57.58 million in 2010, up from GH¢51.85 million in 2009, on account of the Public Sector Workers Housing Scheme.
Deposits went up by 27.5% to GH¢156.53 million, leading to a significant increase in the amount of low cost deposits in the bank's deposit mix.
Akuffo expressed the hope that improvement in the macroeconomic environment would spur growth policies and business activity.
He 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.
The Bank's Board Chairman, Nana Agyei Duku, said the financial institution would position itself to take advantage of the opportunities presented by the improved economy by reorganizing itself to deliver higher returns from all its business segments.
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