Mr. Bright Kofi Frimpong, a Ghanaian based in the United States of America, recently read a banking survey conducted by PricewaterhouseCoopers (PwC) in 2019 and noted the aftermath of the full implementation of the minimum capital requirement directive. According to the survey, a total of twenty-three (23) banks remained in the industry after the 31 December 2018 deadline for the recapitalisation exercise. This comprised of fourteen (14) foreign-controlled banks and nine (9) domestically controlled banks. The increases in paid-up capital, coupled with deposits growth caused a 14.7% growth in banks total assets in 2018 (PwC, 2019). Mr. Frimpong wants to invest in a domestically controlled bank in Ghana with his life saving of $50,000 He approached you as financial analyst with the data on performance of three (3) domestically controlled bank he is considering. (See page two for the data) Required: a) Using the DuPont equation, analyze the performance of the elements of Return of Equity (ROE) and Return on Asset (ROA) of the three (3) domestically controlled banks from 2015 to 2017. (15 marks) b) Based on the analysis in (a), Advice Mr. Frimpong accordingly. (5 marks) 120 marks! Table One FINANCIAL STATEMENT ANALYSIS OF BANKS IN GHANA FOR 2015-2017 THE AMOUNTS ARE RECORDED IN THOUSANDS OF GHANA CEDIS GCB ADB CAL 2015 2016 2017 2015 2016 2017 2015 2016 2017 731,436 884,488 894,400 180,574 193,314 309,611 242,911 248,377 345,237 867,285 1,062,692 1,113,153 273,081 278,457 406,904 388,415 357,446 446,309 135,849 178,204 218,753 92,507 83,933 97,293 145,504 109,069 101,072 425,570 590,270 756,876 262,828 279,939 309,742 352,738 345,361 237,972 net interest income net non- interest income total operating income total operating expense net income before tax income tax net income after tax cash and cash equivalent loans total assets total equity total debt total deposits 350,276 105,541 446,782 147,775 308,894 96,179 -100,197 -105,714 21,222 35,688 47,339 20,829 213,197 42,495 12,085 4,882 208,337 63,171 244,735 299,007 212,715 -78,975 -70,026 26,510 160,042 7,203 145,166 544,683 1,179,975 1,022,684 483,967 610,563 951,675 258,014 428,756 512,376 1,492,623 1,412,977 2,099,330 1,088,071 1,005,302 1,139,356 1,806,115 1,966,394 1,853,674 4,641,166 6,049,604 9,558,151 2,134,147 3,035,493 3,545,143 3,351,039 3,599,355 4,212,638 816,617 1,015,113 1,113,150 332,893 454,778 479,013 505,863 502,768 647,427 3,824,549 5,034,491 8,445,001 1,801,254 2,580,715 3,066,130 2,845,176 3,096,587 3,565,211 3,368,406 4,276,775 6,956,190 1,513,509 2,147,450 2,541,010 1,544,523 2,312,391 2,428,201
