CalBank PLC Returns to Profitability in H1 2024 After Challenging Year
Ghana’s CalBank PLC has announced a remarkable turnaround in its financial performance for the first half of 2024, demonstrating resilience amidst a challenging macroeconomic environment.
The unaudited results, released on July 15, 2024, show significant improvements across key metrics, signaling a robust recovery from the setbacks experienced in previous years.
The bank reported a 49.4% increase in Profit After Tax, rising to GHS 151.9 million from GHS 105.7 million in the same period last year.
This growth was primarily driven by a substantial 130.1% surge in Net Fees and Commissions income, which reached GHS 113.4 million, up from GHS 49.3 million in H1 2023.
CalBank’s balance sheet also showed positive trends, with Total Assets growing by 14.4% to GHS 10.9 billion, while Customer Deposits increased by 9.6% to GHS 8.0 billion.
These figures reflect growing customer confidence and the bank’s ability to attract and retain deposits despite recent challenges.
A significant milestone in the bank’s recovery journey was the successful completion of a capital raise in June 2024, which brought in GHS 145.8 million.
This initiative not only strengthened the bank’s capital position but also resulted in a positive equity of GHS 112.9 million, a marked improvement from the negative GHS 184.9 million reported at the end of 2023.
The turnaround is particularly noteworthy given the headwinds faced by CalBank in recent years. The bank had been grappling with the aftermath of the Domestic Debt Exchange Program (DDEP) in 2022 and significant impairment charges in 2023. In response, management implemented a comprehensive review of operational tactics and enhanced the risk management framework to improve loan portfolio quality.
Carl Asem, Acting Managing Director of CalBank PLC, commented on the results: “Our journey over the past 2 years has been one of the most challenging in the history of CalBank. We have now emerged stronger and entirely focused on delivering value to our stakeholders. Our return to profitability and positive equity are significant milestones that reflect our dedication to the continued financial stability and sustainable growth of CalBank.”
The bank’s performance indicators reflect this positive trajectory. Return on Average Assets (ROAA) improved to 5.8% from 2.3% in H1 2023, while Return on Average Equity (ROAE) saw a dramatic increase to 389.8% from 23.7%. However, the Cost-to-Income Ratio rose to 83.1% from 64.0%, indicating higher operational costs relative to income.
Analysts view CalBank’s return to profitability as a positive sign for Ghana’s banking sector, which has been grappling with the fallout from the government’s debt restructuring programme. However, given the persisting macroeconomic headwinds, they caution that the road to full recovery remains challenging.
Looking ahead, CalBank has outlined strategies to sustain this growth momentum. These include enhancing product and service offerings, optimizing technology investments to improve operational efficiency, expanding the retail franchise, and maintaining rigorous risk management practices.
As CalBank moves forward from this turnaround, all eyes will be on its ability to maintain this positive trajectory and address remaining challenges. The bank’s leadership expresses confidence in building on this momentum to further strengthen their capital position and drive sustainable growth in 2024 and beyond.
