GHANA'S CALBANK 'S 2018 CAN OF PRESSURES

Of course, there is no reason to think of a can of worms in Ghana's CalBank but stretch that a little bit and you will certainly have a can of pressures in 2018 financial year.

According to the audited figures released not too long ago, the only real good news the bank had in 2018 was around its core business of  financing.

From this it earned 15.7% growth in interest income to GHc 773.3m in 2018 from 2017's GHc 668.1m. In addition, interest expense grew by only 10.9% to GHc 351.8m leading to a higher 20.1% increase in net interest income to GHc 421.6m.

And that was about its really concrete piece of good news within the year. Even at that, because loans and advances rose by 30.7% to GHc 2422m, it could be inferred that, compared to relative interest earnings in 2017 from far lower loans and advances, the 2018 level was relatively not enough good news.

But, good news it was and there was no doubt CalBank could have done with more of such in 2018 but from then on, pressures kept coming from the can.

A tantalizer was that fee and commission rose by 4.11% to GHc 76m but that piece of good news was dampened by 31.1% growth in related expense to GHc 6.45m.

Then the real pressures came in the form of 33.4% drop in trading income to GHc 27.1m from GHc 40.7m; in Other operating income by 60.3% to GHc 0.98m and increase in impairment provision of 21.5% to GHc 66.7m.

In the end, gross earnings of CalBank grew by only 3.85% to GHc 852m from GHc 820.4m within the year in spite of the double digit growth in income from its core business as a bank.

However, that was not the last pressure to emerge from the can. To cap it all, personnel cost at GHc 125.4m was 21.4% up and Other expenses increased by 20% to GHc 92.5m leading to 21.6% growth in total expenses to GHc 296.4m ( plus of course, depreciation).

And the result? CalBank's profit before tax just managed 1.83% increase to GHc 222.9m from 2017's GHc 218.9m. Decoded: the Bank's profit margin shrunk from 2017's 19.3% to 17.2%.

Some may say that given the pressures from all angles except net interest income, that too was good news of a kind. It is called resilience.

CALBANK: GHcm, Full year.
                              2018.           2017
Gross earnings 1299.0.        1135.3
Interest income  773.3.           668.1
Interest expense351.8.           317.0
Net interest.        421.6.           351.0
Fee & Comm.        76.0.             73.0
    " Expense.          6.45.             4.92
Trading income    27.1.            40.7
Other Op. Income. 0.98.            2.47
Impairment.           66.7.           54.9
Personnel cost    125.4.         103.0
Other expenses.    92.5.           77.1
Profit before tax 222.9.          218.9
Profit margin %.   17.2.            19.3

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