The Africa Report: Your profits are at a five-year high, and you are the second best performing stock on the Ghanaian bourse this year. What is behind the bank’s recent success?
Frank Adu: It is not a recent success, it is a continuation of the bank’s growth – although it is true that profitability is markedly higher than in recent years. We’ve seen high ROEs (Returns on Equity) and ROAs (Returns on Assets) and particular success in lending, partly due to our focus on long-term loans where other banks are focusing on short-term loans.
We are gaining ground by placing a lot of emphasis on customer care
There is a demand from investors for our stock, and you will see this go up. This is all down to hard work and strategy.
What is your strategy, as a relatively new bank, for acquiring new business and competing with bigger banks?
Bigger banks are losing the national share in the face of younger banks being more aggressive and versatile. We are gaining ground by placing a lot of emphasis on customer care – it is the biggest department in the bank.
What are your dealings with small and medium-sized enterprises (SMEs)? How does CAL Bank balance investing in government bonds versus start-up capital?
We already have a lot of SMEs on our books, and the percentage of this kind of business on our portfolio is growing. SMEs in developing countries have complex needs, and we need to find appropriate ways to finance them. A challenge is actually getting people to come to us – for various historical reasons people are not comfortable dealing with banks.
We also have government debt, but it’s a good balance. You’ve got to support government, it has its own challenges.
Does the bank have any contracts in the oil and gas sector?
We have a lot of downstream activity in the oil and gas sector, and we are striving to move further upstream. Unfortunately the current government policy does not open oil and gas contracts to local banks. It only covers international banks, in Germany, Norway, South Africa… For me this is complete nonsense. If I were the minister I would not stand for this.
What sort of clients do you have beyond Ghana? Does CAL Bank have the potential to become a pan-African entity?
Our banking activity is solely within Ghana, however we engage in a lot of collaborations beyond Ghana. We’ve got a huge international book [worth $430m], which covers places such as Mauritius and Dubai.
But we are not ready to jump on the pan-African bandwagon. Our duty is to return value to shareholders instead of jumping on a bandwagon that may not be the route for every bank.
Are the concerns about Ghana’s economy well founded?
It is true that Ghana has some significant fiscal challenges, however the situation is not that it’s on the brink. ●
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