Financial statements for the nine months ended 30 September 2020

Operating Environment

The challenging economic environment occasioned by the Covid-19 pandemic has dampened business activity and increased overall market risk. The second and third quarter of 2020 have seen a decrease in average interest rates, an uptick in inflation and growth in the fiscal deficit and public sector debt.

Key Earnings Drivers

Third quarter earnings have been driven by Net Interest Income growing 5.5% over prior year. Loans and advances increased by 8.7%. However, Fees and Commissions decreased 24.1% following the inability to close major expected advisory mandates as a result of the pandemic as well as the waiving of various fees and commissions as part of Covid-19 reliefs. Net trading income grew 164.9% due to aggressive growth of fixed income trading volumes. Net Operating income increased 10.3% on prior year despite the challenges in the operating environment.

Operating Costs

Operating costs increased by 16.1% in Q3-2020 over prior year driven largely by newly introduced deposit insurance premiums, the application of IFRS 16 to leases and new head office depreciation. However, staff costs were contained, growing by 3.6% as management increased its focus on cost control in the light of the downturn in economic and business conditions.

Capital and Liquidity

The Group continues to operate from a position of strength with resilient capital and liquidity positions. Our CAR ratio of 20.8% for Q3-2020 remains well ahead of regulatory and internal targets. The Group’s rapid adaptation of operations, products and services to the “new normal” means we are well-placed to support our customers and staff through the Covid-19 crisis.

Asset Quality

The Group anticipated higher levels of credit losses at the onset of the COVID-19 outbreak. The adverse impact of the pandemic on businesses and consumers has driven additional impairment charges consequently reducing underlying profitability. Group Net impairment loss increased by 22.8%. However, NPL ratio dropped from 10.3% in the prior year to 9.0% in Q3-2020.

Philip Owiredu, Chief Executive of CalBank commented: “Despite the heightened market risk, increased volatility and economic uncertainty, we delivered a resilient performance in Q3-2020, growing operating income by 10.3% and increasing balance sheet size by 5.4% on prior year. Our capital adequacy ratio of 20.8% remains well ahead of regulatory and internal targets and liquidity is robust, both of which are expected to remain stable. We continued to make good progress on our strategy in the first nine months of the year.

The Covid-19 pandemic and the attendant lockdowns, restrictions on movement and closure of borders have had impacts on economic activity, both within Ghana and across the rest of the world. The pandemic has negatively affected business revenues and the economy has contracted. The Government of Ghana and the Central Bank have implemented various measures aimed at limiting these impacts.

Looking ahead, our primary objective now is safeguarding the health and well-being of our staff, customers and communities while also protecting the integrity of our balance sheet. Our employees and customers have been the foundation of our continued success and I thank them all for their loyalty and commitment through this difficult year.”