After a challenging period marked by significant losses, CalBank PLC has turned the tide, reporting a profit after tax of GHS 267.7 million for the year 2024.
This marks a dramatic recovery from the previous year’s loss of GHS 671.1 million, signaling a potential turnaround for the bank. The results, detailed in the 2024 Annual Report, reflect a combination of strategic cost management, aggressive loan recoveries, and a focus on operational efficiency.
The bank’s recovery comes after a difficult 2023, where it faced the fallout from the Domestic Debt Exchange Programme (DDEP) and a sharp increase in loan impairments. These challenges had left the bank with a negative capital adequacy ratio (CAR) of -9.10% in 2023, well below the regulatory minimum of 10%. By the end of 2024, the CAR improved slightly to -6.38%, but the bank remains under pressure to meet regulatory requirements.
CalBank’s Chairman, Joe Rexford Mensah, acknowledged the difficulties in his report, noting that the bank had to navigate a volatile economic environment characterized by high borrowing costs and fiscal constraints. However, he expressed optimism about the bank’s future, citing a 26.5% growth in customer deposits, which rose to GHS 9.7 billion, as a sign of renewed customer confidence. The bank also expanded its agent banking network to over 2,200 outlets, further strengthening its market presence.
Despite the positive results, the bank’s financial health remains fragile. The auditor’s report highlighted a material uncertainty regarding CalBank’s ability to continue as a going concern, pointing to its impaired capital position and negative CAR. The bank raised GHS 145.8 million through a rights issue in 2024, but this was not enough to fully address the capital shortfall. The Board has indicated plans to raise additional capital in the near future, though this could potentially dilute the interests of existing shareholders.
The Managing Director, Carl Selasi Asem, emphasized the bank’s commitment to digital transformation and operational efficiency as key drivers of the turnaround. He noted that the bank had streamlined its operations, reduced costs, and invested in technology to improve customer experience. These efforts paid off, with the bank winning five awards at the 2024 CIMG Ghana Customer Satisfaction Index Report.
However, challenges remain. The bank’s loan portfolio continues to be a concern, with a significant portion of loans classified as non-performing. The auditor’s report flagged the calculation of expected credit losses (ECL) as a key audit matter, highlighting the complexity and judgment involved in assessing the bank’s loan impairments.
In summary, CalBank’s 2024 results are a mixed bag. While the return to profitability is a positive development, the bank’s capital position and loan quality remain areas of concern. The coming year will be critical as the bank seeks to strengthen its balance sheet and regain full regulatory compliance. For now, the bank’s leadership is cautiously optimistic, but the road ahead is far from smooth.
