CAL Bank to diversify income
CAL Bank Limited is to make a strong presence in the bond market as it strategises to diversify its income line and rake in more revenues for the group.
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Consequently, the bank says it will first make a strong presence on the local bond market, put a firm grip on it by frequently buying government paper under the primary market and subsequently trading it under the secondary division.
But as time goes on, the bank’s Chief Finance Officer (CFO), Mr Philip Owiredu, said it would subsequently move into the international scene, using the experiences acquired locally.
Mr Owiredu, who is an Executive Director, disclosed this when CAL took its turn at the Ghana Stock Exchange’s Facts Behind the Figures programme in Accra.
“The bond market is picking up in Ghana and we are going to participate in it actively so that we can add a new income line to ourselves,” he said at the event.
The bank took advantage of the programme to explain its 2012 end-year and first quarter 2013 results to the media and stakeholders in the capital market as a whole.
Its 2012 results showed that operating profit rose by 185 per cent from the 2011 close to GH¢66.9 million, thanks to sharp increases in net interest and operating incomes.
As a result, its profit after tax rose from about GH¢17 million the year before to GH¢51.7 million in 2012, representing a 206 per cent growth over the period.
CAL’s 2013 quarter one results also showed that its performance in the first three months of this year mirrored that of the year-end 2012 close. Operating income in the period was up by 120.7 per cent from the 2012 first quarter close to GH¢49.6 million in the same period this year.
Both the first quarter 2013 and full year 2012 results were buoyed, largely, by significant growths recorded in the loans and advances, securities and the net fees and commissions’ portfolios of the bank.
Given the need to sustain that growth and subsequently reward shareholders, Mr Owiredu said there was the need to diversify the bank’s income line, especially as demand for government securities could fall this year.
“The Bank of Ghana has created the primary market and we are familiar with that but once the secondary market (for government bonds) is created, we will move in,” the bank’s CFO said.
CAL will, however, require a license from the Central Bank to be able to trade in the secondary division and Mr Owiredu said his outfit has already requested for such.
He, meanwhile, bemoaned the short-dated nature of instruments in the local bond market, stressing that such does little to help in market deepening.
“The longest dated bond in the country is the five year bond and we believe that it is not long enough for market deepening,” he noted.
Cal Bank has been a member of the primary bond market dealers in the country and is also on the Reuters and Bloomberg platforms as an international dealer in government papers.
Story: Maxwell Adombila Akalare