Societe Generale Ghana Limited’s (SOGEGH) revenue grew by 10.9%y/y to GHS505.52 million for 9M-2020, largely driven by 14.9%y/y growth in interest income. Non interest revenue grew by just 1.1%y/y to GHS135.81 million as slowdown in activity during coronavirus period adversely affected the growth of fees and commissions.

However, the cost-to-income ratio rose to 58.0% in 9M-2020 from 56.9% in 9M-2019 as a result of a 9.5%y/y rise operating expenses to GHS235.06 million. We think that the cost-to-income ratio was elevated by the modest growth in revenue during the period.

Fortunately, there was significant improvement in asset quality on tight credit conditions that reduced loan book growth to just 6.1%y/y. The impact of tight credit conditions on financials was magnified by the jump in relevant ratios such as loan-to-asset and loan-to-deposit ratios, which dropped to 52.1% and 77.7% from 62.2% and 92.8% respectively. The bank’s Non-Performing Loans ratio dropped to 6.6% in 9M-2020 from 9.5% a year ago. In addition, the bank’s cost of risk also declined to 1.3% in 9M-2020 from 1.8% in the comparable period last year, driven by 23.9%y/y drop in credit impairment.

SOGEGH’s net profit grew by 13.4%y/y from GHS82.47 million in 9M-2019 to GHS93.52 million in 9M-2020. Although the improvement in asset quality helped to enhance earnings growth, growth was still lower compared to the previous year due to the impact of the pandemic on banking activity.