Q1 2014 Results Facts Behind the Figures - The Vault Q1 2014 Results Facts Behind the Figures . ... Corporate and Investor Relations 3 ... GCB SCB EBC BBG SBL CAL UBA ADB ZBG GTB ABG

May 13, 2014

Q1 2014 Results Facts Behind the Figures

Presentation Outline

2

Presentation of Speakers Recent trends in the Operating Environment & Banking Industry

CAL Bank 2013 Performance Highlights CAL Bank Q1 2014 Overview and Key Highlights Income Statement Balance Sheet Share Price Performance

Risk Management

2014 Outlook

CAL Bank Q1 2014 Facts Behind the Figures

Speakers

Phillip Owiredu Chief Financial Officer

Dzifa Amegashie Head, Corporate and Investor Relations

3 CAL Bank Q1 2014 Facts Behind the Figures

Joseph Ofori-Teiko General Manager

2014: A Challenging Operating Environment

4

Source: Bank of Ghana, IC Securities Research


CURRENT OUTLOOK

Revenue & Taxes

• Revenue/grants shortfall of GHS 3.3billion for FY 2013

• Total tax revenue shortfall of GHS 2.8billion for FY 2013

• 2013 Revenue and Tax revenue shortfall due to:

– Lower import volumes and taxes; – Declining commodity prices on world markets – Local energy crisis/load shedding

• In 2014, gold and oil revenues expected to remain flat while cocoa revenue expected to improve

• Revenue and consequently Tax revenue expected to be below target for 2014

Foreign Exchange • 17.6% Cedi depreciation against the USD in Q1 2014 as

opposed to a 1.1% depreciation in the same period in 2013

• Bank of Ghana’s foreign exchange restrictions increasing pressure on forex rates

Policy Rate • Central Bank increased policy rate by 200bps from 16% to

18% to curb inflation • Current policy rate expected to be maintained in

2014

Inflation

• Inflation CPI for March 2014 is 14.50%

• 14.5% represents a 7.41% increase YTD

• Drifting further away from target band of 9.5% ±2

• Expected Inflationary pressure as a result of pass through effects of fuel price increases, removal of subsidies and resultant increase in utility tariffs

Consumer Confidence

• Worsening business and consumer sentiments

• Worsening Consumer Confidence may continue throughout 2014 as a result of the increases in utility and fuel price hikes.

• Business pessimism about achieving 2014 targets for capital outlay, employment, sales and revenue

Banking Sector Regulatory

Changes

• VAT introduced on financial services effective June 2014

• Primary Reserve Req. increased from 9% to 11%

• AFOP reduced from 10% to 5% per single currency

• Aggregate reduced from 20% to 10%

• Tightening of liquidity in the private sector

• Lower growth prospects for Banking sector with increased costs and loss of interest income from increased reserve requirements.

Q1-2014: Banking Industry Trends

5

Source: Bank of Ghana, IC Securities Research , Bloomberg


Banking Sector & Money Market

Banking Sector Outlook for 2014

• Deposits - Intense competition for deposits with several banks launching promotions to improve liquidity

• High interest rates - expected to dampen Asset growth (Loans & Advances) and increase default risk across industry

• Mortgage market - New Central Bank restrictions on USD-denominated loans will negatively impact mortgage growth

• Forex - Continued Ghana Cedi devaluation and rising inflation will drive up bank operating costs (occupancy and licensing agreements)

• AFOP - Reduction in AFOP* limits will reduce trade finance business for most banks

• New VAT on financial services will reduce bank deposit growth as business margins are squeezed

• Merchant Bank - Rebranding as “Universal Merchant Bank” following takeover by Fortiz Private Equity in 2013.

• Ecobank Ghana launches 1st digital banking centre in West Africa.

• Fidelity Bank - $70 million capital injection from Kagiso Tiso Holdings, Amethis Finance and Edmond de Rothschild Investment Partners

• Republic Bank to complete takeover of HFC Bank in 2014

Recent Developments in the Banking Industry

• No new banks have opened in 2013

• 27 banks in operation: 14 foreign, 3 government; 10 local private

• Similar product offerings across banks (corporate and retail

loans, mortgages, auto-finance, etc.)

• Interest rates decline slightly during Q1-2014

91-Day: 24.08% to 23.69%

182-Day: 21.26% to 21.24%

1-year: 22.50% to 22.50%

AFOP*: Average Foreign Open Position

CAL Bank 2013 Performance Highlights


CAL Bank is ranked amongst the top 10 banks in Ghana in Profitability

92,010

(3,000)

47,000

97,000

147,000

197,000

247,000

GCB SCB EBC BBG SBL CAL UBA ADB ZBG GTB ABG FBL NIB SGSSB HFC UBL PBL BAR UTB RBL ICB Energy FAB BOA

Source: Company Financials | Note: BSIC, FCP, UMB excluded

CAL Bank 2013 – Impressive Comparative performance

7

FY 2013 Profit before tax margin


58.3%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

BAR UBA SCB CAL GTB ZBG BBG GCB SBL ABG

FY 2013 Share of industry loans

6.37% 6.33% 6.29% 6.14% 5.95%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

18.00%

EBG SBL SCB BBG GCB CAL UTB FBL ADB UBL

FY 2013 Cost-to-income ratio

33.5%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

BAR UBA SCB CAL ZBG BBG GTN SBL ABG NIB

FY 2013 RoA

5.90%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

EBG SBL GCB BBG CAL UBA GTB ADB ABG NIB

Source: Company Financials

CAL Bank Q1-2014 - Key Highlights

8

Robust growth in Income and Profitability


59.0

32.4

7.7

49.6

28.4

21.3

74.1

40.1

8.5

67.8

41.6

29.2

0

10

20

30

40

50

60

70

80

Interest Income Net Interest Income Non Interest Revenue Total Income Profit before tax Profit after tax

GH

S M

illio

ns

Tho

usa

nd

s

Q1-2013 Q1-2014

841 703

1313

1030 860

1745

0

500

1000

1500

2000

Loans & advances Total deposits Total assets

GH

S M

illio

ns Q1-2013 Q1-2014

Measured growth in Assets and Deposits Strong profitability among its listed peers

72

61 59

29

10 6

N/A -

10

20

30

40

50

60

70

80

EBG SCB GCB CAL HFC SG UTB

GH

S M

illio

ns Q1-2014 Net Profit

CAL Bank Q1-2014 – Group Income Statement


Key Items (GHS ‘000) Q1-2014 Q1-2013 Change FY 2013 FY 2012 Change

Net Interest Income 40,107 32,362 23.9% 143,751 84,576 70.0%

Net Fees & Commissions 8,487 7,734 9.7% 31,860 26,977 18.1%

Net Trading Income 15,666 5,795 170.3% 31,153 13,869 124.6%

Other Income 3,555 3,667 -3.1% 14,547 8,911 63.2%

Total Income 67,814 49,558 36.8% 219,217 133,180 64.6%

Credit Loss Expenses (5,141) (4,359) 17.9% (17,515) (17,461) 0.3%

Total Operating Expenses (21,096) (16,808) 25.5% (74,359) (48,865) 52.2%

Profit before tax 41,577 28,391 46.4% 127,343 66,854 90.5%

Profit after tax 29,201 21,348 36.8% 92,463 51,651 79.0%

Net Interest Income growth of 23.9% y/y attributable to a 40% growth in interest-bearing assets

Significant contribution from Net Trading Income, up 170.3% y/y, driven largely by increased customer and proprietary trade volumes and international trade volumes

Total Operating Expenses growth of 25.5% y/y compares favorably to 36.8% growth in Total Income

Staff costs formed 61.8% of Total Operating Expenses in Q1-2014, in line with previous year Q1-2013 (63.0%)

Credit Loss Expense growth of 17.9% in keeping with loan book expansion; recognition of some challenged corporate loans

Commendable 46.4% y/y growth in Profit before tax

Key Facts

CAL Bank Q1-2014 – Revenue Evolution


50%

65%

59%

17%

16%

13%

29%

12%

23%

4%

7%

5%

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Q1 2012 Q1 2013 Q1 2014

GH

S ‘0

00

Net Interest Income Net Fees & Commissions Net Trading Income Other Income

Total Operating Income (2012-2014) Net Interest Income (2012-2014)

12,831

32,362

40,017

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

Q1 2012 Q1 2013 Q1 2014

GH

S ‘0

00

CAL Bank Q1-2014 – Expense Evolution


Net Interest Margin

7.2%

12.3%

11.1%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

Q1 2012 Q1 2013 Q1 2014

Credit Loss Expense

2,320

4,359

5,141

-

1,000

2,000

3,000

4,000

5,000

6,000

Q1 2012 Q1 2013 Q1 2014

Cost-to-income ratio

41.3%

33.9% 31.1%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

Q1 2012 Q1 2013 Q1 2014

NPL ratio

8.4%

6.1%

8.1%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

Q1 2012 Q1 2013 Q1 2014

CAL Bank Q1-2014 – Group Balance Sheet


Key Items (GHS ‘000) Q1-2014 Q1-2013 Y/Y Change Q4-2013 Q/Q Change

Loans and Advances 1,029,595 840,762 22.5% 980,416 5.0%

Fixed Assets 51,257 35,719 43.5% 45,422 12.8%

Total Assets 1,744,923 1,313,267 32.9% 1,561,765 11.7%

Total Deposits 859,965 702,704 22.4% 835,271 3.0%

Borrowings 456,310 244,438 86.7% 382,713 19.2%

Total Liabilities 1,429,369 1,083,766 31.9% 1,277,128 11.9%

Shareholders' Funds 315,527 299,501 5.4% 284,638 10.9%

Total Assets grew by 32.9% y/y largely supported a 22.5% growth in Loans & Advances, mainly to the corporate sector

Fixed Assets growth of 43.5% growth mainly from revaluation of landed properties

Customer deposits increased by 22.4% y/y primarily from increased wholesale deposits and branch expansions in 2013

Borrowings increased 86.7% y/y through securing additional credit lines for on-lending

Key Facts

CAL Bank Q1-2014 - Asset Profile


72%

76% 66%

26%

23%

33%

2%

1%

1%

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

Q1 2012 Q1 2013 Q1 2014

Loans & Advances Other Interest Earning Assets Other Assets

Interest earning assets dominate

Capital Adequacy Ratio – Ample Capital

10.5%

18.7%

17.2%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

Q1 2012 Q1 2013 Q1 2014

Bank of Ghana’s

regulatory

minimum of 10%

Asset Profile – A well diversified loan book

14

Q1 2014


Q1 2013

Sectorial Distribution of Loans

Agric

Mining 3%

Manuf. 4%

Construction 24%

Electricity 9% Commerce

& Finance 23%

Transport 3%

Misc 5%

Services 13%

Government 16%

Agric

Mining 2%

Manuf. 4%

Construction 22%

Electricity 7%

Commerce & Finance

20% Transport 3%

Misc 5%

Services 11%

Government 26%

Asset Profile: Deposit Mix


15

44%

49%

7%

Current Accounts Time Deposits Savings Deposits

Q1-2014 Deposit Mix

90%

10%

Individual and Private Enterprises Public Enterprises

CAL Bank Q1-2014: Share price performance

16

Source: Bloomberg; Stock data rebased to 100

Key Facts*

• Outstanding Shares: 548.26million

• Market capitalization : GHS 537.30million

• CAL stock appreciation (YTD): 1.03%

• Dividend per share for FY 2013: GHS 0.053

• Dividend yield: 3.57%

• EPS: GHS 0.1686

• P/E Ratio: 6


Shareholding Structure*

SSNIT 33%

ADP I 28% PROPARCO

7%

Other Shareholders

32%

CAL Bank Share Price and Volume Traded: January - March 2014*

-

500

1,000

1,500

2,000

2,500

3,000

0.80

0.85

0.90

0.95

1.00

1.05

1.10

1-Jan 8-Jan 15-Jan 22-Jan 29-Jan 5-Feb 12-Feb 19-Feb 26-Feb 5-Mar 12-Mar 19-Mar 26-Mar

Vo

lum

e (

Tho

usa

nd

s)

Shar

e P

rice

(G

HS)

Volume Traded Share Price

* As at 31st March, 2014

2014: Risk Management Imperatives


Preserving our Balance sheet in

challenging times

• CAL has identified key challenges in business operating environment in 2014

• Imperative to mitigate key increased risks in 2014 and beyond to preserve healthy Balance Sheet

• Employ strict adherence to Board-mandated Credit, Liquidity & Operational risk-appetite.

• Risk Managers/Business Units have enhanced monitoring, managing and reporting on identified risks

RISK MITIGATION MEASURES

Foreign Exchange Risk

• Reduce exposure to foreign currency credit lines for on-lending

• Strictly adhere to loan currency matching to mitigate currency mismatch default risk

Interest Rate & Credit Risk

• Target Advisory/Non-funded income to mitigate risk of reduced Interest income from loans as interest rates rise

• Rebalance Asset distribution of Govt. Securities vs. Loans to mitigate reduced income from slow-down in loan growth

• Closely monitor exposure to at-risk sectors (government, construction, mortgage, real estate, down-stream oil & gas)

Inflation • Minimize exposure to foreign currency denominated expenses

• Rigorous Cost control to ensure value for money in procurement and capital expenditure

Our Focus for 2014

18

Corporate Banking

Retail Banking

People

• Deepen cross training to foster job rotation

• Reward staff productivity and performance to attract and retain high quality personnel

• Develop and train for capacity in key growth sectors - oil & gas, power, syndications

• Strict risk management discipline to mitigate challenges in business environment

• Prudent asset growth to safeguard healthy balance sheet

• Measured scaling -up of syndicated transactions and loans

• Focus on key growth sectors of energy , telecoms, mining and services

• Increase branch network to 25 to improve brand visibility

• Launch of Private Banking suite in Kumasi

• Increase deposit taking ATMs to 5 by year end 2014

• Grow retail deposits through further promos: currently “Visa World Cup Mini Promo”

• Target growing middle class clientele for retail assets

Technology


• Increase installed ATMs to 82 by year end 2014

• Increase deposit taking ATMs to 5 by year end 2014

• Enhance IT infrastructure to deliver products electronically including :

• EMV cards Issuance and electronic statements • Enhanced Internet Banking

• VISA/ MasterCard POS Merchant Terminals • MasterCard /China Union Products • VROL Financials ( Visa online dispute resolution platform)

THANK YOU

Q&A


Documents

Q1 2014 Results Facts Behind the Figures - The Vault Q1 2014 Results Facts Behind the Figures . ... Corporate and Investor Relations 3 ... GCB SCB EBC BBG SBL CAL UBA ADB ZBG GTB ABG