CAL Bank’s Non-Performing Loans Surge to 51.6% as Capital Adequacy Falls Below Regulatory Threshold
CAL Bank has reported a year-on-year increase in profit for the second quarter of 2025, recording GHS 184 million in net earnings compared to GHS 151.9 million in Q2 2024. The GHS 32.1 million growth in profit was largely attributed to an uptick in the bank’s operating income, which rose marginally from GHS 370.8 million to GHS 383.9 million over the period.
The profit growth came despite a decline in interest income, which dipped from GHS 208.2 million in Q2 2024 to GHS 189.9 million in Q2 2025, suggesting improved cost management or increased non-interest income supported earnings.
However, the bank’s asset quality continues to pose a significant challenge. CAL Bank’s non-performing loans (NPL) ratio worsened significantly, rising from 38.6% in Q2 2024 to 51.6% in Q2 2025. This indicates that over 51 pesewas of every cedi loaned by the bank are currently non-performing, highlighting an urgent need to strengthen loan recovery strategies and tighten credit risk controls.
In addition to asset quality concerns, the bank’s capital adequacy ratio (CAR) fell below regulatory requirements. CAL Bank recorded a CAR of -7.6% in Q2 2025, substantially lower than the Bank of Ghana’s minimum threshold of 13%, raising questions about the bank’s capital buffers and its ability to absorb future losses.
The bank’s balance sheet also contracted during the review period. Total assets declined from GHS 10.94 billion in Q2 2024 to GHS 10.68 billion in Q2 2025. The dip was mainly due to reductions in cash and cash equivalents as well as loans and advances, though investment securities increased, pointing to a more conservative asset allocation strategy.
As at the end of Q2 2025, the bank held GHS 2.08 billion in cash and cash equivalents, GHS 5.05 billion in investment securities, and GHS 1.37 billion in loans and advances.
CAL Bank’s total liabilities dropped from GHS 10.83 billion to GHS 10.27 billion, driven in part by a decline in borrowings, which fell from GHS 1.85 billion to GHS 1.50 billion. This was despite an increase in customer deposits, which rose from GHS 7.85 billion in Q2 2024 to GHS 8.17 billion in Q2 2025.
Shareholders’ equity saw a significant improvement, rising from GHS 112.9 million to GHS 401.4 million over the period, possibly reflecting retained earnings from improved profitability and other equity injections.
While CAL Bank’s Q2 2025 profit performance shows resilience, the elevated NPL ratio and sub-regulatory CAR present critical risks that could undermine the bank’s financial stability if not addressed urgently.
