GTB, UTB, ECO and FiBank have all
reported impairment losses. These banks
should work on their credit lending policies and ensure that their loans & advances portfolios are well mitigated and
risk adjusted in order to avoid the short
and long-term unexpected shocks. The
Sierra Leone Stock Exchange was commissioned in 2009, providing a market
place for trading of equities, commodities, bonds, forex and derivatives. The
banks should start participating within it
to generate more investment capital and
maximise their profits generation, rather
than simply focusing on granting loans &
advances in the short-term, which might
erode their total investment capital.
Investing Activities For The Period Under Review
O
ut of the 7 banks under review,
FiBank tops the investment
trading over it assets, recording
an impressive rate of investment. The
bank has spread its assets, recording 36%
on risk-free trading (T-Bills), 31% on
risk assets trading (advances to customers), 15% on other trading (such as forex)
and 18% cash in hand. It may be useful
for the bank to reduce some of it risktrading activities and focus some more of
its assets into forex and securities trading.
SCB has spread its total assets recording
32% on risk-free trading, lending rate of
14% of total assets, forex and securities
trading of 5% and 49% cash in hand.
The bank is well managed in terms of liquidity and its distribution of resources.
Its cash holdings however are too high
and the bank should consider participating in other trading activities like increasing its forex and securities trading and
even somewhat increasing its lending
rate. UBA and GTB invested in T-Bills
and other investments that are risk-free
at a rate of 25% and 24% respectively
against its total asset base. UBA should
however try to participate in the economic development in Sierra Leone by slightly increasing it’s risk assets portfolio, as
SME’s are the most important players
to the jump-start of any economy. The
bank should consider increasing it loans
& advances portfolio. Its 2% lending rate
of total assets indicates that they are not
necessarily a lending financial institution.
UBA closed up its books for 2013 with
69% cash in hand against its total assets.
If this surplus cash in hand were invested,
UBA would have triumphed over GTB
in profit generation. The bank was able
to manage its expenses quite well given
Chart 2: Investment Trading Over Assets
this hyperinflation economy. UTB has
the lowest risk-free investment activities,
recorded at 12% of its total assets; it is
recommended that the bank reduce its
risk assets trading and invest more in TBill and bonds. Although the bank was
able to produce huge