CalBank weathers second wave onslaught in Q1

Philip Owiredu, Managing Director, CalBank
  • PAT and total assets up 9.1% and 11.5% respectively
  • pandemic bites hard as net impairment loss up 109.4%
  • loan book shrinks 25.5%
  • sets ambitious 20% loan book growth target

CalBank has continued to post respectable gains despite fresh economic challenges occasioned by the rise in COVID-19 case count in the first quarter of the year and the ensuing reimposition of some restrictions.

Key metrics which saw an appreciation Year-on-Year (YoY) include Profit After Tax (PAT) – 9.1%; Non-funded income (156.9%); total assets (11.5%); Net trading income (231.8%); as well as cash and cash equivalents (154.8%).

The bank was also able to rope in a decent volume of deposits, as total deposits grew by 8.3% to GH¢ 4.2 billion. The growth was attributed to an aggressive pursuit of “retail strategy, deepening retail offerings and enhancing technology platforms.”

This will serve as welcome news to shareholders of the bank, seeing that it trailed its peers listed on the exchange in this metric, during the comparable period in 2019.

This information was disclosed in a statement of financial performance for the quarter, which was presented when the Accra-bourse listed bank took its turn at the Ghana Stock Exchange (GSE) – organised ‘Facts behind the Figures’ session.

Despite these gains, the bank saw a significant net impairment loss of 109.4%, representing some GH¢22.1 million, for the first quarter of 2021 compared to the same period in 2019. Also, loans and advances dipped by 25.5%, or GH¢2.2 billion, with net interest income down by 7.2%.

Calbank, speaking through its Chief Finance Officer (CFO), Thomas Boansi Sarpong, explained that the decrease in net interest income and income from loans and advances was due to a “significant change in earning asset mix”, as the lender moved towards government-backed investment securities and away from loan growth.

“The 7.2% drop was mainly due to repositioning of the bank during the height of COVID-19 as bank sought security government papers which have lower yield,” he said, adding that the decline in loans and advances from GH¢2.9 billion in the first quarter of 2020 to GH¢2.2 billion in the equivalent period of 2021, was primarily due to repayment of outstanding facilities and conversion of loan to bond by an important customer, GET Fund.

He further indicated that impairment was taken largely on accounts in sectors heavily impacted by COVID-19, including hospitality and education, amounting to GH¢180 million or 7.5% of the loan book.

Loan book growth

Despite these developments, including a dip in advances to the construction sector from 33% to 26.7%, and the prevailing uncertainty over the pandemic, Mr. Sarpong expressed optimism that the lender will grow its loan book by a minimum of 20% for full year 2021.

Detailing the composition of the growth, which should translate to some GH¢400 million, the Calbank CFO revealed that it has in the pipeline facilities for government amounting to GH¢150 million; manufacturing GH¢ 100 million, retail, including mortgage financing GH¢20 million, vehicle financing GH¢20 million; green initiative Ecofridge GH¢30 million and salary advances GH¢50 million.

He added that despite the bank’s plan to aggressively pursue growth by enlarging customer footprint across all market segments, effectively mine customer data to develop superior customer intelligence and improve on its digitisation agenda, this will be done in a manner that does not violate recent gains which has seen cost-to-income ratio drop to 43.2%.

“The cost will not be beyond our ability to cater for, that will not change our cost to income ratio significantly as we expect to improve our revenue. That is what we are working towards,” he said.

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