Ghana CAL Bank Sees Profit Growth Slowing on Rates

CAL Bank Ltd., a lender in Ghana, said profit growth will be slower next year as interest rates decline. The shares fell for the first time in five days.

“We see interest rates trending downwards,” Philip Owiredu, executive director of the bank, said today in an interview in the capital, Accra. “As rates fall, we expect the profit that we make from lending to be affected a bit.”

Net income in the nine months through September more than doubled to 66.7 million cedis ($29.8 million). Net interest income, the money banks make from lending, advanced 95 percent to 107.9 million cedis.

Yields on Ghana’s 91-day treasury bills, used by banks in determining lending rates, will continue to fall as the government moves toward issuing more long-term debt, Owiredu said.

Shares fell for the first time in five days, declining 2 percent to 98 pesewas at by the close in Accra. The shares have gained 158 percent this year, compared with the 78 percent gain on the Ghana Stock Exchange Composite Index.

Next year “is not going to be as bright as this year for CAL Bank, especially due to the trend in interest rates,” Derrick Mensah, a stock trader at African Alliance Securities Ltd., said by phone from Accra. “I believe that some investors were disinvesting in CAL to invest in other companies that they think will deliver better growth.”

Falling Rates

Ghana’s three-month borrowing costs, which reached 23.12 percent on Feb. 22, declined to 19.68 percent at the most recent auction on Nov. 1, according to data compiled by Bloomberg.

The West African nation’s inflation rate rose to 11.9 percent in September, the highest this year, from 11.5 percent the month before. The central bank is targeting inflation of 9 percent plus or minus two percentage points.

CAL Bank will seek to earn more through fees, commissions and trading income to make up for the expected losses in interest income, said Owiredu. These income streams at the moment account for between 30 percent and 35 percent of the bank’s total income, he said.

The bank plans to increase its branch network to 21 by the end of this year and 30 by 2015, Managing Director Frank Adu Jr said at a conference today.

To contact the reporter on this story: Moses Mozart Dzawu in Accra at

To contact the editor responsible for this story: Andres R. Martinez at

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