CAL Bank to halt branch networks - MD

Managing Director of CAL Bank Ltd., Frank Adu Jnr., has hinted of plans by management to discontinue its expansive branch network as the bank steps up its branchless banking strategy.

He said the bank’s decision is to strategically capitalise more on ‘digitalisation’, as it has become more expensive to open and operate physical branches in the country.

This, he said, will require the bank to embrace current technological trends in the fast-evolving banking industry to offer customers convenience and also reach out to the unbanked, arguing that banks that do not realise this and conform will face challenges.

“We recognise the way banking is evolving, and considering demographics there is no point focusing on ‘bricks’ (opening new branches) going forward as a great financial institution. So there is every reason why we are focusing on ‘clicks’ and investing a lot in technology, which is very symptomatic of the new generation.

“We have 25 branches today, so we will probably do two or three more and be done.

“I also think that those institutions which do not see this will have problems 5 years from now, which is why we are not very focused on branches,” he said.

Mr. Adu Jnr. said this on Wednesday when the bank took its turn in the “Facts Behind the Figures” programme at the Ghana Stock Exchange in Accra.

He expressed concern about rising fraud in the market, and indicated the bank’s readiness to put measures in place to tighten security and fight the recurring menace of fraud in the industry.

He said CAL Bank has generally performed fairly well among its peers from last year to the first quarter of this year “when the country has recorded a not too favourable macroeconomic environment”, with inflation rising from 16.8% as at April 2015 to 18.7% within the same period in 2016, and policy rate up to 26% from 21% in April last year.

Despite the macroeconomic challenges that the bank faces, CAL Bank’s Head of Investor Relations Dzifa Amegashie maintained in her presentation that there still is “some good news for CAL in an industry that is quite challenged.

“The bank is growing at a much more muted rate than we have in the past. Among other achievements we have had some employee growth, from around 700 last year to 751; and also expanded from 21 to 25 branches,” she explained.

Additionally, the bank’s total assets grew marginally by 5.4% due to a considerable reduction of investment in government securities for first quarter of the year, the report stated -- adding also that the company’s net interest income, which is the difference between the revenue that is generated from a bank's assets and the expenses associated with paying out its liabilities, has grown by 34.3% from the same period last year.

Managing Director-Ghana Stock Exchange, Kofi S. Yamoah, indicated that his team has over the years been impressed with CAL Bank’s performance, but urged the bank to address the issue of its share price -- which is said to have not reflected its performance; adding that “The situation is an indictment on the market.

“There have always been complaints about it, and I hope that as soon as we get into a plateau of macro environment we should see the proper place of CAL Bank on the matter; so that it can encourage other issuers to come to the market place.”