Our performance was driven by our continued focus on our 3 year strategy for which the year under review formed the second year of implementation. We focused on some key strategic areas including; diversifying our business portfolio, introducing innovative products and services, enhancing delivery channels, employing an effective risk management tool kit
and process automation to achieve cost efficiency.
The global economic recovery looked better in 2014 with the United States driving this recovery. Britain saw an increase in the pace of its recovery, the Euro zone however experienced weak growth. Growth in China saw a moderate slow down whilst growth in Brazil stayed subdued. The growth in Sub-Saharan Africa on the other hand continued at a faster pace, driven by sustained infrastructure investment and a vibrant services sector.
Locally the Cedi saw a significant depreciation against the major trading currencies; 32.5% against the US dollar, 28.4% against the British pound and 23.1% against the Euro. Interest rates also increased during the year with the benchmark 91 – Day Treasury bill rate closing the year at 25.8% as compared to a rate of 19.5% prior year. The policy rate also increased from 16% in 2013 to 21% in 2014. These increases in rates resulted in increases in both lending and borrowing rates in the industry. The Bank of Ghana also reduced the primary reserve ratio by a 100 basis points to 10% which translated into additional liquidity for investment by banks.
In spite of the challenges above, CAL Bank was able to identify opportunities and mitigate the threats to ensure the Group delivered good results and continue to increase its financial strength in the industry. We remain confident that 2015 holds further opportunities for our growth and performance.
In the year under review, our bank continued to execute its strategy. I am happy to report that in spite of the macroeconomic challenges CAL Bank continues to deliver strong growth with a profit before tax of GH¢194.4 million compared to GH¢125.4 million the previous year. The Group also recorded a profit before tax of GH¢198.5 million compared to GH¢127.6 million the previous year. The Bank’s profit after tax increased by 52.6% and that of the
￼Group by 53.0%, GH¢140.4 million and GH¢143.2 million respectively. These results reflect our commitment to the disciplined application of our strategy to ensure we become a first tier bank.
The Group’s total assets grew by 74.4% during the year to close at GH¢2.72 billion, up from GH¢1.57 billion. The total assets of the Bank increased by 73.7% from GH¢1.56
billion to GH¢2.71 billion. The growth in Group assets was mainly funded by a 68.7% increase in customer deposits to close at GH¢1.35 billion, up from GH¢799.22 million and borrowings and shareholders’ funds which increased by 116.2%
and 39.2% respectively. We will continue to
strengthen our business by ensuring that we listen to our customers and potential clients, and connect them to the financial solutions they need across the Group.
Although we realised an improvement in our non-performing loans ratio from 7.9% in the previous year to 6.2% we are still keen on improving this further. During the year there were specific credits which were showing signs of deterioration and therefore we had to take the prudent measure of recognizing the challenges in those credits whilst we fervently pursued recovery.
>We maintained a relatively high capital adequacy ratio of 22.5% and 22.2% for the Group and the Bank respectively, well above the regulatory requirement of 10% as a direct result of our subordinated term debt which is allowed as capital for capital adequacy purposes, providing an ample buffer against any eventuality. During the year we were successful in sourcing additional funding including the subordinated term debt of
USD28.5 million from Proparco and USD40 million from OPIC/Citibank to support our medium and long term lending. We contracted borrowings totalling USD116 million for our short term funding needs which were employed to enhance our business. The increase in the support from the international market demonstrates the confidence of the international community in our brand whilst at the same time boosting our liquidity for our continued growth.
We are making progress with the expansion of our service delivery channels adding new branches in Osu, East Legon and Tema Community 25 to offer convenience to our customers and also aid in our quest to attract more and cheaper deposits. Two of our branches, Weija and Asafo were relocated to
bigger business offices to accommodate the customer traffic in those branches. Additional branches are being developed to attain our foot print objective of thirty branches by the end of 2015. Our ATM roll out programme continued ending the year with 95 ATM’s installed with 85 in operation at our various business offices and carefully selected off-site locations. The CAL internet banking service platform was refreshed and enhanced with added features to offer customers a platform which is ahead of the competition that allows them to access our services remotely. We continue to make significant investments in technology which has contributed significantly in achieving operational efficiency as evidenced by a reduction in our cost to income ratio in spite of our expanded operations. CAL Bank continues to strengthen its business model through innovation, enhanced use of technology and automation for a better customer experience.
We are revamping our retail and business banking operations by expanding the scope of our e-banking offering. We are increasing the scope of our card offering and are in the final stages of our project work on our Master Card platform and point of sale services. We are working on expanding our footprint through agencies and have acquired the requisite human capital to ensure successful implementation.
We invested significantly in our human resources through a variety of training initiatives, this has ensured that competent and professional individuals continue to serve our clientele at all times. The continued development of our people will be our focus as clients are at the centre of everything we do and only through adequate staff development will we be able to render a superior service for the benefit of our valued customers.
Head Office Project
We commenced the development of our head office project in October 2014, it is a 22 month project expected to be completed in August 2016. Upon completion it will offer us more latitude and presence; further deepening the Bank’s image and brand. The new head office should also provide an enhanced ambience for our staff and clients for the provision of better service.
Over the years CAL Bank has prided itself in the continued support to the less privileged in society and our long-standing tradition of helping the communities in the areas where we operate. Educational support to give hope to needy children from primary through to the tertiary level still remained dear to us. As part of our continued support to develop beach soccer in Ghana, we sponsored the national beach soccer team to participate in the Copa Lagos tournament during the year. CAL Bank still remains the title sponsor of the National Beach Soccer Championship in Ghana.
In our contribution to “green Ghana”, we collaborated with the Department of Parks and Gardens to plant over six thousand trees in Accra, Kumasi and Takoradi, the cities we operate in. These trees are meant to withstand both the dry and wet weather conditions and our staff are indeed proud to have been part of this great effort.
This initiative emphasises the importance we place on delivering a balance between economic growth, social wellbeing and the protection of the environment in support of the goal of sustainable development.
The Group worked effectively together to ensure that synergies are maximised. CAL Brokers Limited and CAL Asset Management Company Limited contributed 1.9% of the Group’s after tax profit, a value of GH¢2.8 million. This growth clearly shows that our subsidiaries continue to be part of the market leaders in their respective markets.
Funds under management by the Group increased to GH¢298.0 million, up from GH¢142.9 million the previous year.
Our custody offering being managed through CAL Nominees Limited continued to gain market share by increasing its client base from 23 at the end of 2013 to 30 at end of the review period. The outlook for the custody business still remains positive and we will work to deliver superior service to our existing clients and attract new customers.
Despite the difficult prevailing market conditions, we are committed to the disciplined implementation of our strategy, identifying emerging growth opportunities, managing the inherent risk associated with our businesses and improving our operational efficiencies for continued profitability and sustained growth.
As we execute the final year of our three year strategy that has been very successful, we will develop our next growth strategic plan which will have as its pivot excellent delivering of service to our clients and returning value to our stakeholders.
We are mindful of the pitfalls and difficulties of our environment. The difficult economic situation, extremely high energy costs but also unreliable, high interest rates, a depreciating currency and recently the threat posed to digital and e-banking by cyber-crime.
In this regard even as we fashion strategies to improve shareholder value, we also formulate strategies, methods and tactics to deal with the pitfalls and difficulties of the time.
Thank you all.
Frank Brako Adu Jnr.