C A L B A N K L I M I T E D F I R S T Q U A R T E R 2 0 1 7 F A C T S B E H I N D T H E F I G U R E S P R E S E N T A T I O N G H A N A S T O C K E X C H A N G E - M A Y 2 0 1 7
D i s c l a i m e r This report was prepared by CAL to provide background information on the Group. The report is issued for information purposes only, especially with regards to enabling users understand the inherent potential of the business. It is therefore not a solicitation to buy or sell the stock. The information contained herein is subject to change and neither the bank nor its staff is under any obligation to notify you or make public any announcement with respect to such change. Users are hereby advised to exercise caution in attempting to rely on this information and carry out further research before reaching conclusions regarding their investment decisions. 2
M a n a g e m e n t Te a m S p e a k e r s Mr. Philip Owiredu Executive Director Mr. Joseph Ofori-Teiko General Manager Mr. Charles Amoah Assistant General Manager Ms. Dzifa Amegashie Investor Relations 3
O U T L I N E > Operating Environment > Banking Sector Overview > CAL Bank Overview > 1Q2017 Performance of Listed Banks > CAL Bank FY 2016 & 1Q2017 Performance > Share Price Evolution > Strategy & Outlook
O P E R A T I N G E N V I R O N M E N T : G H A N A
G H A N A M A C R O O V E R V I E W 1Q- 2017 I N F L AT I O N D O W N C E D I S T A B I L I T Y 12.8% in March 2017 19.2% in March 2016 Year-to-date 1 : April 2016 April 2017 USD/GHS: -0.3% +0.5% GBP/GHS: +0.6% -5.0% EUR/GHS: -4.8% -4.3% 23.5% in March 2017 25.5% in January 2017. P O L I C Y R AT E D E C L I N E Policy rate has declined since November 2016. Outlook is for further decline following easing in inflationary pressures. Source: Bank of Ghana, Summary of Economic and Financial Data, March 2017 1 As at April 28, 2016 and April 28 2017 6
Dec-15 Dec-15 Jan-16 Jan-16 Feb-16 Feb-16 Mar-16 Mar-16 Apr-16 Apr-16 May-16 May-16 May-16 Jun-16 Jun-16 Jul-16 Jul-16 Aug-16 Aug-16 Sep-16 Sep-16 Oct-16 Oct-16 Nov-16 Nov-16 Nov-16 Dec-16 Dec-16 Jan-17 Jan-17 Feb-17 Feb-17 Mar-17 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 G H A N A M A C R O O V E R V I E W 1Q- 2017 GDP GROWTH RATE (%) 3.90 4.40 3.90 4.10 1.30 25.0 20.0 15.0 10.0 5.0 0.0 DECLINING INFLATION (%) March 2017: 12.8% Sources: Bank of Ghana, Summary of Economic and Financial Data, March 2017 Ghana Statistical Service Bloomberg 7
G H A N A M A C R O O V E R V I E W 1Q- 2017 CEDI STABILISING VS. MAJOR CURRENCIES 8.00 7.00 6.00 5.00 4.00 3.00 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 USDGHS EURGHS GBPGHS STRAINED FISCAL POSITION (%) Public Debt/GDP 2012 2013 Fiscal Deficit/GDP 2014 2015 2016 50.2% 53.8% 60.8% 72.2% 72.5% -12.0% -10.1% -9.5% -6.7% -8.7% Sources: Bank of Ghana, Summary of Economic and Financial Data, March 2017 Ghana Statistical Service Bloomberg 8
B A N K I N G S E C T O R O V E R V I E W
G H A N A B A N K I N G S E C T O R I N D I C E S 1 Q - 2017 The banking sector currently has 33 operating banks: 17 foreign, 3 government and 13 local banks POLICY RATE¹ DEPOSITS MAR. 2016 26.0 PERCENT MAR. 2017 23.5 PERCENT ΔY/Y -9.6 PERCENT FEB. 2016 40.0 GHS Billion FEB. 2017 53.2 GHS Billion ΔY/Y 33.1 PERCENT FEB. 2016 62.7 GHS Billion TOTAL INDUSTRY ASSETS FEB. 2017 83.6 GHS Billion ΔY/Y 33.3 PERCENT FEB. 2016 30.1 GHS Billion LOANS AND ADVANCES² FEB. 2017 36.0 GHS Billion ΔY/Y 19.6 PERCENT INDUSTRY NPL RATIO INDUSTRY CAR FEB. 2016 15.6 PERCENT FEB. 2017 17.7 PERCENT ΔY/Y 13.3 PERCENT FEB. 2016 18.1 PERCENT FEB. 2017 18.5 PERCENT ΔY/Y 2.2 PERCENT Bank of Ghana, Summary of Economic and Financial Data, March 2016 & March 2017 ²Banking Sector Stability Report, March 2017 10
1 Q 2 0 1 7 P E R F O R M A N C E O F L I S T E D B A N K S 11
O V E R V I E W O F L I S T E D B A N K S B A N K Access Bank Ghana * Agricultural Development Bank* CAL Bank Ecobank Ghana Ghana Commercial Bank HFC Bank Societe Generale Ghana Standard Chartered Bank Ghana UT Bank T I C K E R ACCESS ADB CAL EGH GCB HFC SOGEGH SCB UTB Banking industry`s performance expected to pick up with improvements in energy supply; on-going fiscal consolidation reflected in lower treasury bill rates *Recently listed banks BANKING SEC TOR OUTLOOK Expected mergers and acquisitions to be driven by maturation of investments by financial investors and the proposed increase in bank capitalization to GHS 250 300 million. Increases in the middle income class expected to boost retail banking sector 12
C A L V E R S U S L I S T E D P E E R S I N 1 Q 2 0 1 6 / 1 Q 2 0 1 7 PROFIT-AFTER-TAX (GHS mn) 88.0 83.6 78.0 70.9 98.0 66.8 1Q2016 1Q2017 44.8 40.9 31.7 14.0 9.3 12.3 EGH SCB GCB SOGEGH CAL HFC TOTAL ASSETS (GHS bn) 7.1 8.3 5.1 6.0 4.5 3.4 3.3 3.9 2.1 2.4 1.6 1.9 1Q2016 1Q2017 EGH GCB SCB CAL SOGEGH HFC Source: Company Financials. All data as of 31 st March 2016 & 2017 respectively ADB, Access have not reported 1Q2017 results. UTB has not reported its earning since 3Q2015; 13
C A L V E R S U S L I S T E D P E E R S I N 1 Q 2 0 1 6 / 1 Q 2 0 1 7 CUSTOMER DEPOSITS (GHS bn) 4.7 5.9 3.5 4.1 2.4 3.3 2.3 1.6 1.5 1Q2016 1Q2017 1.7 1.6 1.2 EGH GCB SCB CAL SOGEGH HFC LOANS AND ADVANCES (GHS bn) 3.1 3.2 1Q2016 1Q2017 1.5 1.4 1.2 1.3 2.0 1.9 1.0 1.0 0.9 0.9 EGH GCB SCB CAL SOGEGH HFC Source: Company Financials. All data as of 31 st March 2016 & 2017 respectively ADB, Access have not reported 1Q2017 results. UTB has not reported its earning since 3Q2015; 14
C A L V E R S U S L I S T E D P E E R S I N 1 Q 2 0 1 7 RETURN ON AVERAGE EQUITY (Annualised) 47.7% 45.7% 45.6% 58.5% 1Q2016 1Q2017 25.2% 32.7% 34.9% 32.7% 22.8% 23.6% 27.4% 15.9% SCB GCB EGH CAL SOGEGH HFC RETURN ON AVERAGE ASSETS (Annualised) 8.2% 8.1% 8.4% 7.9% 1Q2016 1Q2017 4.8% 5.1% 3.5% 4.5% 4.5% 2.9% 2.5% 2.8% GCB SCB CAL EGH SOGEGH HFC Source: Company Filings ADB, Access and UTB have not reported 1Q2017 results 15
C A L V E R S U S L I S T E D P E E R S I N 1 Q 2 0 1 7 79.3% 75.7% COST-TO-INCOME RATIO 1Q2016 1Q2017 62.7% 48.5% 50.4% 47.1% 56.3% 42.9% 39.1% 40.5% 31.4% 33.8% HFC GCB EGH SOGEGH CAL SCB 28.8% 28.0% NET INTEREST MARGINS 37.1% 1Q2016 1Q2017 21.7% 19.7% 21.6% 15.4% 13.2% 11.7% 12.1% 10.7% 11.6% SOGEGH GCB SCB EGH HFC CAL Source: Company Financials. All data as of 31 st March 2016 & 2017 respectively ADB, Access have not reported 1Q2017 results. UTB has not reported its earning since 3Q2015; 16
C A L V E R S U S L I S T E D P E E R S I N 1 Q 2 0 1 6 / 1 Q 2 0 1 7 NON PERFORMING LOANS 47.7% 42.8% 1Q2016 1Q2017 17.8% 16.1% 14.0% 12.0% 16.8% 17.5% 20.7% 22.0% 4.8% 9.2% SOGEGH GCB SCB EGH HFC CAL 16.5% 14.4% 25.0% 30.0% CAPITAL ADEQUACY RATIO 32.3% 19.4% 17.0% 15.5% 13.4% 12.3% 22.0% 1Q2016 1Q2017 19.5% SOGEGH GCB SCB EGH HFC CAL Source: Company Financials. All data as of 31 st March 2016 & 2017 respectively ADB, Access have not reported 1Q2017 results. UTB has not reported its earning since 3Q2015; 17
C A L B A N K F Y 2 0 1 6 & 1 Q - 2017 P E R F O R M A N C E
C A L B A N K AT A G L A N C E Q 1-2017 SHAREHOLDING STRUCTURE CAL Bank Limited is an indigenous bank established in Ghana in 1990, listed on the Ghana Stock Exchange SUBSIDIARIES 3 WHOLLY OWNED EMPLOYEES 792 PROFESSIONAL STAFF ROBECO AFRIKA FONDS 2.1% FRANK BRAKO ADU, JR 2.4% OTHERS 27.7% SSNIT 33.2% 27 CHANNELS 92 15 CENTUM EXOTICS 2.7% ICAM 4.3% ARISE B.V. 27.7% Branches ISSUED SHARES ATMs MARKET INFORMATION¹ MARKET VALUE Active Corr. Banks PUBLIC FLOAT ADPI successfully sold 27.7% stake in CAL Bank to Arise BV (Netherlands) Arise B.V - a financial services investment company owned by Norfund, Rabobank and FMO 548.26 MILLION 378.30 MILLION CEDIS 36.74 PERCENT 1. As at 31/03/2017 19
S U M M A R I Z E D I N C O M E S TAT E M E N T 2 0 1 4-2016 (GHS 000) FY 2016 FY 2015 FY 2014 ΔY/Y Interest Income 557,631 466,822 355,027 19.5 Interest Expense (306,317) (218,192) (170,943) 40.4 Net Interest Income 251,314 248,630 184,084 1.1 Fees and Commission Income 63,419 69,841 54,921 (9.2) Fees and Commission Expense (4,437) (4,511) (3,019) (1.6) Net Fees & Commissions 58,982 65,330 51,902 (9.8) Net Trading Income 43,297 70,699 76,337 (38.8) Other Income 13,584 16,357 12,755 (17.0) Operating Income 367,177 401,016 324,942 (8.4) Net impairment Loss (199,243) (35,677) (20,478) 458.5 Net Operating Income 167,934 365,339 304,464 (54.0) Total Operating Expense (150,883) (144,031) (106,067) 4.8 Profit Before Tax 17,051 221,308 198,533 (92.3) Income Tax Expense (5,313) (44,005) (45,454) (87.9) National Fiscal Stabilisation Levy (853) (11,065) (9,928) (92.3) Profit-After-Tax 10,208 166,238 143,151 (93.9) 20
S U M M A R I Z E D B A L A N C E S H E E T 2 0 1 4-2016 (GHS 000) FY 2016 FY 2015 FY 2014 ΔY/Y Investments in Government Securities 675,838 291,868 409,217 131.6 Loans and Advances to Customers 1,966,394 1,805,285 1,337,205 8.9 Other Assets 724,325 1,137,067 890,053 (36.3) Fixed Assets 252,301 130,280 78,917 93.7 Total Assets 3,618,858 3,364,500 2,715,392 7.6 Customer Deposits 2,312,391 1,544,523 1,348,151 49.7 Deposits From Banks and Other Financial Institutions 62,803 58,309 47,690 7.7 Borrowings 572,810 1,113,452 827,455 (48.6) Other Liabilities 151,351 128,717 92,555 17.6 Shareholders Equity 519,503 519,499 399,541 0.0 Total Liabilities and Shareholders Equity 3,618,858 3,364,500 2,715,392 7.6 21
C H A L L E N G E C H A L L E N G E S W E F A C E D I N 2 0 1 6 W H A T W E D I D BDC sector impairments worsened Scaled down new business to BDC sector Targeted L/T relationships with other sectors i.e. mining, services, trading Recognised & wrote down impaired portion of BDC debt Continued negotiating with defaulters to recover NPL s Specific commerce sector loan impairments Comprehensive review of loan/collateral monitoring procedures Tight market liquidity resulting in interest costs growing faster than interest income Partnered with IFC to deploy Agency Banking in Q3-2017 Deployed new Retail banking products and services to reduce credit concentration, boost deposits and reduce costs of funds 22
1Q- 2 0 1 7 U N A U D I T E D C O N S O L I D AT E D I N C O M E S TAT E M E N T KEY ITEMS (GHS 000) 1Q2016 1Q2017 Y/Y CHANGE 1 Profitability Key facts Net Interest Income 75,420 73,026 (3.2)% Net Fees & Commissions 18,520 10,231 (44.8)% Net Trading Income 10,315 16,978 64.6% Other Income 3,113 5,009 60.9% Total Income 107,368 105,244 (2.0)% Credit Loss Expenses (4,946) (16,445) (232.5)% Net Operating Income 102,422 88,799 (13.3)% Total Operating Expenses (41,972) (42,670) (1.7)% Profit before tax 60,450 46,129 (23.7)% Profit after tax 40,860 31,744 (22.3)% Net Interest Income declined by 3.2% y/y attributable to higher cost of funds Trading income also increased by 64.6% due to increased trading volumes and volatilities in the local currency in the quarter Credit Loss Expense increased by 232.5% due to challenges in some energy and commerce sector loans Operating expense increased marginally by 1.7% due to prudent cost control measures Profit after tax declined by 22.3% y/y due to relatively higher provisioning made in Q1-2017 The Bank in partnership with the International Finance Corporation (IFC) is set to introduce Agency Banking over the next 2 years to drive non-funded income 23
1Q2014 1Q2015 1Q2016 1Q2017 1Q2014 1Q2015 1Q2016 1Q2017 1Q2014 1Q2015 1Q2016 1Q2017 I N C O M E S TAT E M E N T E V O L U T I O N 2 0 1 4-2017 NET INTEREST INCOME GHS mn 56.17 75.42 73.03 NON-FUNDED INCOME GHS mn Other Income Net Fees & Commissions 38.4 27.7 10.8% Net Trading Income 31.9 32.2 9.7% 15.5% CREDIT LOSS EXPENSE GHS mn 16.4 40.11 12.8% 56.5% 44.9% 32.3% 52.7% 5.1 5.2 4.9 30.6% 44.5% 58.0% 31.8% 24
1Q2014 1Q2015 1Q2016 1Q2017 1Q2014 1Q2015 1Q2016 1Q2017 1Q2014 1Q2015 1Q2016 1Q2017 I N C O M E S TAT E M E N T E V O L U T I O N 2 0 1 4-2017 COST-TO-INCOME RATIO % NPL RATIO % NET INTEREST MARGIN % 43.0% 40.0% 39.1% 40.5% 10.0% 8.0% 8.1% 9.2% 13.0% 12.0% 12.2% 11.6% 37.0% 34.0% 31.0% 28.0% 31.1% 33.3% 6.0% 4.0% 7.0% 4.8% 11.0% 10.0% 9.0% 10.8% 10.7% 25.0% 2.0% 8.0% 25
1Q- 2 0 1 7 U N A U D I T E D B A L A N C E S H E E T KEY ITEMS (GHS 000) 1Q2016 1Q2017 Y/Y CHANGE 2 Balance Sheet Key facts Cash & cash equivalents 767,318 705,127-8.1% Trading assets 311,284 901,214 189.5% Loans & Advances 1,966,110 1,851,199-5.8% Other assets 77,999 225,956 189.7% Property, Plant & Equipment 152,908 257,277 68.3% TOTAL ASSETS 3,275,619 3,940,773 20.3% Customer deposits 1,597,479 2,309,408 44.6% Other Deposits 61,331 102,701 67.5% Borrowings 933,277 769,709-17.5% Other liabilities 123,034 207,372 68.5% Shareholders Equity 560,498 551,583-1.6% TOTAL LIABILITIES/S.FUNDS 3,275,619 3,940,773 20.3% Total Assets grew by 20.3% y/y which was largely as a result of increased investment in Government securities, reflecting the Bank s cautious approach to lending Customer deposits increased by 44.6% y/y. The growth in customer deposits was largely influenced by the successful deployment of innovative products and services rolled out as part of the Bank s Digitization Strategy Borrowings decreased by 17.5% as a number of short term-facilities to support asset growth were retired 26
A S S E T P R O F I L E 2 0 1 4-2017 100% 80% 60% 40% 20% 0% DISTRIBUTION OF ASSETS 11.80% 15.80% 18.60% 21.00% 29.20% 37.00% 21.40% 32.00% 59.00% 47.20% 60.00% 47.00% 1Q2014 1Q2015 1Q2016 1Q2017 Loans & Advances Other Interest Earning Assets Other Assets Transport, Storage & Communicatio Commerce & n Finance 2% 22% Electricity, Gas & Water 22% 1Q 2016 Services 9% Government 12% Construction 21% SECTORAL DISTRIBUTION OF LOANS Miscellaneous 5% Agriculture, Forestry & Finishing <1% Mining & Manufacturing 4% Transport, Storage & Communication 2% Commerce & Finance 20% Electricity, Gas & Water 21% 1Q 2017 Services 12% Construction 25% Miscellaneous 7% Government 4% Agriculture, Forestry & Finishing <1% Mining & Manufacturing 7% 27
C A P I TA L & R E T U R N S 2 0 1 4-2017 RETURN ON EQUITY CAPITAL ADEQUACY RATIO 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 48.6% 42.9% 29.3% 23.0% 1Q2014 1Q2015 1Q2016 1Q2017 25.0% 22.5% 20.0% 17.5% 17.2% 22.0% 22.0% 19.5% RETURN ON ASSETS 15.0% 8.0% 7.6% 6.7% 12.5% 6.0% 4.0% 2.0% 5.0% 3.2% 10.0% 7.5% Regulatory Minimum: 10% 0.0% 1Q2014 1Q2015 1Q2016 1Q2017 5.0% 1Q2014 1Q2015 1Q2016 1Q2017 28
Volume Traded Share Price (GHS) Millions C A L S H A R E P R I C E E V O L U T I O N J A N 2 0 1 6 - A P R 2 0 1 7 60 1.2 50 1 40 0.8 30 0.6 20 0.4 10 0.2 0 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 0 Volume Last Price 29
0.50x 2.17x 1.01x 3.59x 3.36x 1.35x 4.60x 1.70x P R I C I N G E V O L U T I O N 2 0 1 4-2016 PRICE-TO-EARNINGS RATIO PRICE-TO-BOOK RATIO 1Q2014 1Q2015 1Q2016 1Q2017 1Q2014 1Q2015 1Q2016 1Q2017 30
D e l i v e r i n g o u r 2 0 1 6-2 0 1 8 s t r a t e g y Retail Banking Deploy Agency Banking in 2017 through distribution outlets and financial service agents Develop e-payment platforms with emphasis ondigital channels. Leverage on growing card schemes to offer diversified card services for enhanced customer experience, positively impacting on our customer base and translating into increased deposits. Promote financial inclusion by deploying digital solutions to offer branchless banking services. Corporate Banking People Employ cutting-edge technology to deliver enhanced tailor-made solutions for our corporate customers to offer them convenience and real-time banking. Enhance forex generating capacity to ensure we meet forex needs of our customers. Enhance relationship management and product knowledge. Implement a comprehensive performance management and reward systems. Deepen staff skills and knowledge. Develop and implement structured career progression and succession planning program. Enhance organizational competence. Implement workplace health and safety program. Leverage on growth in digital and mobile technology to develop cutting edge solutions that will offer customers Technology Risk Management & Compliance convenience and also reach out to the unbanked. Enhance transaction and process efficiency through technology. Continuous and sustained investments in technology to ensure development of up-to-date, efficient products and services. Enhance loan monitoring and early-detection toolkits to improve quality of loan portfolio. Maintain low NPL ratio. Continuously develop risk management and compliance culture amongst staff through training and other staff engagements. Ensure adherence to regulatory requirements and best practice compliance procedures. 31
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