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HFC Bank Ghana Sees Slower Loan Growth With Small Business Focus

HFC Bank Ltd. (HFC), a mortgage lender which has gained 18 percent this year, plans to focus on giving advances to small- and medium-sized businesses while slowing the pace of loan growth.

Lending will rise 40 percent this year from 60 percent in 2012 in a bid to curb impairment charges, Managing Director Asare Akuffo said in an interview in Accra, the capital, today. Loan losses more than doubled to 5.6 million cedis ($2.8 million) last year, he said.

Small and medium-sized companies are “a more sustainable source of income for the bank,” he said. HFC’s mortgage portfolio remains important and “could grow faster this year on new housing developments,” Akuffo said.

Ghana’s $35 billion economy is forecast to expand 8 percent this year, according to the Finance Ministry. Banks have boosted lending as companies look to grow in the country, which started production of oil for export in December 2010. The Ghana Stock Exchange’s gauge of financial shares has jumped 53 percent this year, beating a 49 percent gain in the composite index.

As many as 70 percent of Ghanaian companies are considered small- or medium-sized, Yaw Adu-Koranteng, research analyst at Accra-based NDK Financial Services Ltd., said by phone. “These businesses provide essential services that may not require very skilled labour.” The Association of Ghana Industries classifies a small company as having five to 30 employees and a medium- sized operation as 30 to 100 workers.

HFC’s profit increased 41 percent to 15.4 million cedis last year while net interest income, the money banks make from lending rose to 45.5 million cedis from 39.7 million cedis, it said today. Loans to customers advanced 60 percent to 330.2 million cedis.

The company’s shares were unchanged at 53 pesewas by the close in Accra.

To contact the reporter on this story: Moses Mozart Dzawu in Accra at mdzawu@bloomberg.net

To contact the editor responsible for this story: Emily Bowers at ebowers1@bloomberg.net

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