CAL Bank has posted a profit after tax of GH¢145.2 million cedis for the 2017 fiscal year.
The significant profit recorded was due to an improved operating income of 25.9 per cent and a reduction in the banks operating costs by 30.5 per cent.
The banks income, which comprises revenue from loans disbursed, charges and commissions on ATM cards as well as cheques and other services, amounted to GH¢446.3 million cedis, up from the GH¢357 recorded in 2016.
The Chairman of the Board of Directors of CAL Bank, Mr Paarock Vanpercy, told shareholders at the 2017 Annual General Meeting (AGM) of the bank held in Accra on May 3 that the bank was in a strong financial position.
Mr Vanpercy also assured shareholders of CAL Bank that a successful transfer of GH¢250 million from the bank’s income surplus account would propel it to meet the Bank of Ghana’s (BoG) new minimum capital requirement of GH¢400 million set for commercial banks operating in the country.
“We are pleased to inform you that all other things being equal, we are on course to meeting the GH¢400 million minimum capital by the end of this year,” he said.
The transfer of the GH¢250 million will increase the bank’s capital from GH¢100 million to GH¢350 million, but Mr Vanpercy added that “the shortfall of GH¢50 million would be met in the course of the year through the bank’s operational results.”
As a result of the collective decision by the board of the bank to use its income surplus as a guarantee to meet the new capital requirement, shareholders will not be paid dividends for the year 2017 as such moves will reduce the funds available for capitalisation.
Instead, the board proposed a bonus share issue where shareholders would receive one share for every seven shares held to compensate shareholders for not being paid a dividend.
Mr Vanpercy explained that the bank would issue a total of about 78 million shares, valued at the time of the decision at GH¢103 million (GH¢1.36p per share), almost double the value of the last dividend paid to shareholders in 2015 of GH¢53 million.
“Today our share price stands somewhere around GH¢1.93 pesewas per share, so in effect the value that will be given to shareholders as a result of this bonus issue will be GH¢153 million, compared to GH¢53 million which was cash paid out for the year 2015,” Mr Vanpercy said.
Increase in share capital
The board also approved an increase of the bank’s authorised share capital from one billion ordinary shares to two billion ordinary shares so that it would have enough unused shares for future issues.
Shareholders also voted unanimously to approve a buy-back of up to 15 per cent of the bank’s own shares, following a capitalisation issue.
This is to protect shareholders’ value in the bank, as the prices of the shares may go down after the capitalisation.
CAL Bank progress
In its 14 years of operation, CAL Bank has posted strong profits on annual basis, albeit inconsistent, but instead of expending all through dividend payments, the bank has maintained a tradition of preserving a chunk in its surplus account.
From GH¢124.3 million in 2014, funds in the income surplus account rose to GH¢162.4 million in 2015 before declining to GH¢144.9 million in 2016 on account of a sharp fall in profits. Last year, it rose to GH¢175.9, almost enough to make up for the bank’s capital deficit. — GB