Friday, March 26, 2010

CAL Bank’s next hurdle

CAL Bank is currently in the throes of overcoming its next challenge, which is to raise additional capital to meet the minimum capitalization of GHC60 million by the end of 2012.

Frank Adu, Managing Director of the Bank in an interview with Journalists at the end of bank’s annual general meeting in Accra last week said: “the board and management will pursue the best possible options available to ensure that we meet the capitalization as set by the Central Bank with the approval of the shareholders.”

“The next hurdle is to meet the minimum capitalization,” he maintained.

The Bank has through a rights issue in September last year, raised GHC30 million, which placed it ahead of the GHC25 million minimum requirement set by the Bank of Ghana for the locally-owned banks by the end of 2010.

Taking its income surplus account into consideration, of GHC5.9 million at the end of 2009, Cal Bank may only have to worry for about GHC30.1 million new capital to meet the 2012 requirement.

The Bank recorded a profit before tax of GHC10.5 million, a nine percent dip on the previous year figure.

This was largely due to the result of the valuation losses taken on the equity portfolio held by the brokerage arm of the group arising out of the adverse performance of listed equities on the Ghana Stock Exchange.

This notwithstanding, the Bank realized a significant growth in the balance sheet of the group from GHC339 million to GH 453 million, an increase of 34 percent.

Mr. Adu told shareholders at the meeting that significant growth of the bank was realized in investment in government securities of 73 percent with a modest growth of 12 percent in loans and advances.

These were funded mainly by growth in customer deposits from GHC177 million to GHC278 million, an increase of 57 percent and increase in the capital base of the Bank from GHC8 million to GHC25 million.

There was a deliberate effort to slow down growth in the loan book as a result of the difficult economic environment in a bid to avoid potential loan losses in the loan book going forward.

Shareholders’ equity at the end of the period amounted to GHC58 million compared to the previous year’s amount of GH 37 million an increase of 58percent as a result of the additional injection of equity and retained earnings.

“We continue to increase our activities and presence in the corporate banking segment of the market and also develop our retail banking offering. The growth in the branch network expansion programme was deliberately stalled during the year under review;

This is as a result of the bank’s decision to grow the business in a more measured manner,” Mr. Adu said.

Paarock VanPercy, Group Board Chairman said: “As we move into 2010 there are lots of reassuring signs about the year ahead, inflation has fallen two points to 16 percent, the 91 day benchmark interest rate ended the year at 22.5percent having peaked at 25.9 percent.

“All of these indications allow us to be upbeat about the outlook for 2010 and the opportunities and therein for the bank,” he stated.

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