#1CAL Bank Half-Year 2014 Results Call Presentation August 2014#2Presentation Outline Company Overview Vision and Strategy Executive Management Team 2014 Operating Environment Competition and Markets CAL HY 2014 Performance Highlights Share Price Performance Risk Management Imperatives ©2014 Outlook Half-Year 2014 Investor Presentation - August, 2014 CAL Bank Bank on Our Service 2#3Company Overview ■ Established: July, 1990 Overview Listings: Ghana Stock Exchange, IPO in 2004 ■ Issued Shares: 548.26 million ■ Market cap: GHS 466.02 million (USD 155.26 million)¹ Shareholding Structure² Other Shareholders 32% SSNIT 33% PROPARCO ■ Focus: corporate banking, asset-backed retail lending, treasury, corporate finance, asset management, brokerage 7% ADP I 28% 1. 2. ■ Network: 20 branches, 64 ATMs, E-Banking platform ■ Headcount: 635 employees GHS millions 250 214 200 150 50 650 100 EBG CAL Bank is ranked amongst the top most profitable banks in Ghana Profit-before-tax - HY 2014 164 139 GCB Share Price as at 30th June, 2014 - GHS 0.85 | USDGHS as at 30th June, 2014 - GHS 3.3509 Shareholding structure as at June, 2014 Half-Year 2014 Investor Presentation - August, 2014 42 92 88 CAL Bank Bank on Our Service 10 70 SCB SBL CAL UBA 3#4Vision and Strategy (2013 – 2015) Vision Strategy CAL Bank Bank on Our Service To be a leading financial services group creating sustainable value for our shareholders To become a member of the 1st quartile group of banks in Ghana by 2015 through a focused drive to optimize 5 key functional areas of operation: People, Products, Processes, Presence and Profitability Half-Year 2014 Investor Presentation - August, 2014 4#5Executive management team CAL Bank Bank on Our Service Mr. Frank B. Adu Jnr - Managing Director Mr. Frank Adu Jnr. is an Investment Banker and the Managing Director of the Bank. He is the Chairman of the Roman Ridge School and of the Golden Beach Hotels Group of Ghana. He is a member of the Board of Okyeman Environmental Foundation, the University College of Agriculture and Environment and a non-executive member of Metropolitan Life Insurance Company. Mr. Philip Owiredu - Executive Director Mr. Owiredu is the Executive Director of CAL Bank. Prior to this, he was the Director of the bank's Financial Control Department, which is responsible for all financial and management accounting support and compliance with legal and regulatory requirements. Mr. Owiredu joined the Bank in December 2004 from KPMG where he was Senior Manager after eight years. He is a fellow of the Association of Chartered Certified Accountants (UK). He is a member of the Ghana Stock Exchange Council. Mr. Joseph Ofori-Teiko - General Manager Mr. Ofori-Teiko is currently the General Manager, Risk Management and Compliance. He has a Masters Degree in Banking and Finance, with twenty five (25) years working experience in the Banking Sector. He has a rich experience in Credit and Treasury Management. He is a member of the Board of CAL Asset Management Company Limited, a Fund Management subsidiary of the Bank. Mr. Charles Amoah - Assistant General Manager Mr. Amoah has been the Assistant General Manager since 2012. He joined the Bank in 1994 as the Manager of the Credit and Marketing Department, and then rose to the position of Credit Risk Manager and Deputy Head of Department in 2004, with the responsibility for credit risk analysis and credit administration procedures. Mr. Amoah graduated from the University of Ghana with a BSc (Hons.) in Mathematics and Physics and later an MBA in Finance. Half-Year 2014 Investor Presentation - August, 2014 5#6- 2014 Operating Environment GLOBAL ECONOMY ◉ ☐ HY 2014 Global economy continues gradual recovery currently growing at 2.8% p.a Gold prices bearish, hovering around USD 1,300/ounce from USD 1,235 in June 2013 Cocoa prices improved to about USD 3,000/tonne from USD 2,284 in June 2013 ☐ Global oil demand remains weak and there is ample crude oil supply to meet demand HY 2014 ◉ Bank OUTLOOK IMF projects 2014 global GDP growth at 3.6% p.a, up from 3% in 2013 Gold prices expected to remain flat Cocoa prices projected to remain bullish Outlook for crude prices for rest of 2014 bearish OUTLOOK FOREIGN EXCHANGE 27.0% Year-to-30th June 2014 Cedi depreciation against US$ compared to 6.7% deprecation Year-to-30th June 2013 The central bank has reversed its ban on commercial banks importing dollars directly in a bid to increase the supply of foreign currency and support the cedi (29th July, 2014) HY 2014 POLICY RATE Policy rate as at June 2014 was 18%, up from 16.0% in June 2013 Half-Year 2014 Investor Presentation - August, 2014 ☐ OUTLOOK Bank of Ghana increases MPR for 2nd time in 2014 by 100bps to 19% to contain inflation pressures and realign interest rates in favour of domestic assets MPR is expected to increase in near term CAL Bank on our Service 6#72014 Operating Environment CURRENT OUTLOOK Bank CAL Bank on our Service INFLATION Headline inflation: 15.0% up from 7.9% in June 2013 Food inflation: 7.9% up from 7.3% in June 2013 Non-food inflation: 20.3% up from 15.1% in June 2013 of is Upward trajectory inflation expected to continue throughout the year as prices adjust to reflect pass- through effects of increased petroleum prices, utility tariffs, transportation costs and cedi depreciation CURRENT CONSUMER & BUSINESS CONFIDENCE Worsened Business and Consumer Confidence alongside heightened inflation ■ Half-Year 2014 Investor Presentation - August, 2014 OUTLOOK Consumer Confidence may worsen as a result of unemployment, household financial conditions and general economic outlook. Business Confidence may continue to fall as businesses anticipate slowdown in industry growth, sales, revenues and capital outlays due to exchange rate depreciation and high costs of operations 7#8Competition and Markets CURRENT OUTLOOK Bank CAL Bank on our Service BANKING SECTOR & MONEY MARKET • First Capital Bank introduced in 2014 Still 27 banks in operation: 14 foreign, 4 government; 9 local private Interest rates increase during HY 2014 (January to June 2014): 91-Day Treasury Bill: 19.2% to 24.1% 182-Day Treasury Bill: 18.7% to 21.3% 1-year note: 17.0% to 22.5% 2-year note: 16.8% to 23.0% 3-year bond: 19.2% to 24.4% 5-year bond: 19.0% to 23.0% Weighted average interbank rate: 16.3% to 24.0% from January June 2014 Average lending rates of banks: 25.6% to 27.9% from January - June 2014 ◉ ◉ Deposits - Intense competition for deposits with several banks launching promotions to improve liquidity - High interest rates expected to dampen Asset growth (Loans & Advances) and increase default risk across banking industry Mortgage market - Feb 2014 Central Bank restrictions on USD-denominated loans have negatively impacted mortgage growth Forex - Continued Cedi depreciation and rising inflation will continue to drive up bank operating costs Proposed New 17.5% VAT on financial services (although currently suspended) will reduce bank deposit growth Half-Year 2014 Investor Presentation - August, 2014 8#9CAL Bank HY 2014 - Key Highlights Robust growth in Income and Profitability (GHS millions) 180 154 160 140 126 120 100 80 60 40 20 79 69 HY 2013 HY 2014 140 31 60 60 100 56 88 22 42 CAL Bank Bank on Our Service 61 Interest Income Net Interest Income Non Interest Revenue Total Income Profit before tax Profit after tax Measured growth in Assets & Deposits (GHS millions) Net Interest Margin HY 2013 HY 2014 2500 16.0% 14.3% 2101 14.0% 2000 12.0% 10.7% 9.5% 10.0% 1500 1283 1148 874 879 1000 743 8.0% 6.0% 4.0% 500 2.0% 0 0.0% Loans & advances Total deposits Total assets HY 2012 HY 2013 HY 2014 Half-Year 2014 Investor Presentation - August, 2014 9#10CAL Bank Bank on Our Service CAL Bank HY 2014 - Key Highlights Good Profitability among listed peers (GHS millions) 160 150 140 120 100 80 60 40 20 119 111 HY 2014 Net Profit 60 21 19 5 EBG GCB SCB CAL HFC SOGEGH UTB Performing at par with listed peers in ROE and ROA ROE ROA CAL Secures USD 28.5 million New Tier 2 Capital CAL Bank has secured a $ 28.5 million capital credit from French government development finance institution, Societe De Promotion Et De Participation Pour La Cooperation Economique S. A.(PROPARCO) The facility, which is an unsecured loan, will be used as Tier 2 capital in supporting CAL's on-lending activities. The facility provides CAL Bank with competitive interest rates under flexible terms and conditions and enhances the bank's single obligor limit. Proparco is CAL's 3rd largest shareholder with 6.86% shareholding. CAL Launches 1st Deposit-Taking ATMs in Ghana 60% 52% 52% 50% 44% 38% 40% 30% 20% 20% 20% 3.9% 10% 7% 5% 6% 6% 4% 3% 4.7% 0% EBG SCB GCB CAL SOGEGH HFC UTB Half-Year 2014 Investor Presentation - August, 2014 THERE'S A NEW KIND OF ATM MACHINE IN TOWN DEPOSIT BEC WITHDRAW Get more done, faster! You can now deposit cash at your convenience with CAL Bank's new withdrawal and deposit ATMs E Bonk 000 CAL Bank on Our Service 10#11CAL Bank HY 2014 - Group Income Statement Key Items (GHS '000) HY 2014 HY 2013 Y/Y Change Net Interest Income 79,422 69,298 14.6% Net Fees & Commissions 26,473 14,731 79.7% Net Trading Income Other Income Total Income 26,878 8,540 214.7% 6,906 7,644 (9.7)% 139,678 100,213 39.4% Credit Loss Expenses (6,789) (8,763) 22.5% Total Operating Expenses (45,177) (35,385) (27.7)% Profit before tax Profit after tax 87,712 56,065 56.4% 61,483 42,140 45.9% CAL Bank Bank on our Service Key Highlights Net Interest Income growth of 14.6% y/y attributable to a 90% growth in interest- bearing assets ■ Significant contribution from Net Trading Income, up 214.7% y/y, driven largely by increased customer and proprietary trade volumes and international trade volumes Total Operating Expenses growth of 27.7% y/y compares favorably to 39.4% growth in Total Income ■ Staff costs formed 61.2% of Total Operating Expenses in H1 2014, in line with previous year H1 2013 (61.3%) Key Ratio HY 2014 HY 2013 Change Credit Loss Expense decreased by 22.5% Cost to income ratio 32.3% 35.3% 8.4% Interest expense to Interest income 48.6% 45.2% (7.5)% 45.9% y/y growth in Profit after tax Net Interest Margin 10.7% 14.3% (26.7)% Half-Year 2014 Investor Presentation - August, 2014 11#12CAL Bank HY 2014 - Revenue Evolution GHS millions 160 Total Operating Income Evolution 140 120 5% 23% GHS millions 80 80 90 90 Net Interest Income Evolution 70 0 CAGR: 59.7% 60 100 7% 13% 12% 50 80 60 60 40 40 20 20 16% 40 40 4% 29% 31 30 59% 17% 65% 50% 20 10 69 69 CAL Bank Bank on Our Service 79 0 HY 2012 HY 2013 HY 2014 0 Net Interest Income Net Trading Income Net Fees & Commissions Other Income HY 2012 HY 2013 HY 2014 Half-Year 2014 Investor Presentation - August, 2014 12#13CAL Bank HY 2014 - Expense Evolution Improving Cost-to-income Ratio 45.0% 40.0% 40.6% 10.0 9.0 8.0 7.0 CAL Bank Bank on Our Service Credit Loss Expense (GHS millions) 35.0% 6.0 35.3% 5.1 32.5% 5.0 30.0% 25.0% 20.0% HY 2012 HY 2013 HY 2014 Half-Year 2014 Investor Presentation - August, 2014 4.0 3.0 2.0 1.0 8.8 6.8 HY 2012 HY 2013 HY 2014 13#14CAL Bank HY 2014 - Group Balance Sheet Key Items (GHS '000) HY 2014 HY 2013 Change Loans and Advances 1,148,211 873,549 31.4% ■ Investments 476,232 192,349 147.6% Other Assets 26,941 14,873 81.1% Fixed Assets 54,859 38,061 44.1% Total Assets 2,100,922 1,282,760 63.8% Customer Deposits 879,499 742,526 18.4% Borrowings 803,806 206,519 289.2% Accruals and Other Liabilities 52,206 73,847 (28.9)% Shareholders' Funds 319,785 230,962 38.5% Total Liabilities and Shareholders' Fund 2,100,922 1,282,760 63.8% Key Items Net Interest Margin Non Performing Loans HY 2014 HY 2013 Change 10.7% 14.3% (25.3)% 86,575 55,166 56.9% Half-Year 2014 Investor Presentation - August, 2014 CAL Bank Bank on our Service Key Highlights Total Assets grew by 63.8% y/y largely supported by a 147.6% growth in Investments and a 31.4% growth in Loans & Advances, mainly to the corporate sector. Increase in total assets of 63.8% also attributable to a 147.6% increase in investments in short-term government instruments. Fixed Assets growth of 44.1% mainly from purchase of capital assets in relation to the branch expansion program and revaluation. Customer deposits increased by 18.4% y/y primarily from increased wholesale deposits and increase in branch network ■ Borrowings increased 289.2% y/y through securing additional facilities to support asset growth and increased volume of trade/financing activities for on-lending. 14#15CAL Bank HY 2014 - Asset Profile Interest earning assets still dominate GHS billions 2.5 2 1.5 1 2% 26% 0.5 72% 0 HY 2012 Loans & Advances Capital Adequacy Ratio - Trending down 25.0% 19.1% 20.0% 15.0% 10.0% 5.0% 0.0% HY 2012 1% 23% 76% 1% 33% 66% HY 2013 HY 2014 Other Interest Earning Assets Other Assets CAL Bank Bank on Our Service NPL ratio trend: CAL Bank vs. Industry BOG's regulatory minimum of 10% CAL Bank -Industry 16.0% 14.0% 17.8% 16.2% 12.0% 14.1% 13.3% 12.8% 10.0% 8.0% 6.0% 8.1% 7.2% 6.0% 4.0% 2.0% 0.0% HY 2013 HY 2014 HY 2012 HY 2013 HY 2014 Half-Year 2014 Investor Presentation - August, 2014 15#16Asset Profile - Reducing Government exposure Services 12.3% Misc. 4.3% Transport 3.5% HY 2013 Government 23.4% Agriculture 0.3% Misc. 4.94% Mining 2.3% Services, 12% Construction HY 2014 Government 14% *CAL Bank Bank on Our Service Agriculture, 2% Mining, 3% Construction 24.45% 24.6% Transport, 3% Commerce, 19% Manufacturi Commerce 18.4% Utilities 7.0% ng 3.9% Utilities, 13% Manufacturi ng, 4% Half-Year 2014 Investor Presentation - August, 2014 16#17Deposit Liabilities Profile: Deposit Mix Savings Deposits 7% Time Deposits 44% Current Accounts 49% Half-Year 2014 Investor Presentation - August, 2014 HY 2014 Public Enterprises 10% Individual & Private Enterprises 90% CAL Bank Bank on Our Service 17#18CAL Bank HY 2014: Share price performance CAL Bank Share Price and Volume Traded: January - June 2014 Share Price (GHS) 1.20 1.00 0.80 0.60 0.40 0.20 Volume Traded -Share Price لد 0 1-Jan 16-Jan 31-Jan 15-Feb 2-Mar 17-Mar 1-Apr 16-Apr 1-May 16-May 31-May 15-Jun 30-Jun 1. Share Price at 30th June, 2014: GHS 0.85 Half-Year 2014 Investor Presentation - August, 2014 CAL Bank Bank on Our Service 8000 7000 6000 5000 4000 3000 2000 1000 18 Volume (Thousands)#192014: Risk Management Imperatives CAL has identified key challenges in the business operating environment for the remainder of 2014 CAL Bank Bank on Our Service Preserving our Balance sheet in challenging times • Imperative to manage emerging and existing risk issues in 2014 and beyond to preserve healthy Balance Sheet • Continue strict adherence to Board-mandated Credit, Liquidity & Operational risk-appetite. • Risk Managers and Business Units have enhanced monitoring and reporting on identified risks for emerging challenges to be addressed on-time RISK MITIGATION MEASURES Foreign Exchange Effectively manage FOREX assets and liabilities to reduce exchange risk. Risk Interest Rate & Credit Risk • Increase Advisory/Non-funded income to mitigate risk of reduced net Interest income from loans as interest rates rise Rebalance Earning Asset mix to manage credit risk and interest rate risk. Closely monitor exposure to at-risk sectors (government, construction, mortgage, real estate, down-stream oil & gas) due to emerging economic challenges. Minimize exposure to foreign currency denominated expenses Inflation Rigorous Cost control to ensure value for money in procurement and capital expenditure Half-Year 2014 Investor Presentation - August, 2014 19#20Our Focus for 2014 Corporate Banking Increase in non-funded income Prudent asset growth to safeguard healthy balance sheet Measured scaling-up of syndicated transactions and loans Focus on key growth sectors of energy, telecoms, mining and services Maximise opportunity to secure Advisory mandates • Increase branch network to 25 to improve brand visibility CAL Bank Bank on Our Service Retail Banking People Extension of our private banking service Grow retail deposits through promotional activities. Target growing middle class clientele for retail assets and deposits. Deepen cross training to foster job rotation Reward staff productivity and performance to attract and retain high quality personnel oil & gas, power, Continue to develop and train for capacity in key growth sectors syndications Provide a conducive environment to attain a high staff retention rate. Technology • . Increase installed ATMs to 100 by year end 2014 Enhance process and storage infrastructure Enhance IT products including: EMV cards Issuance and electronic statements Enhanced Internet Banking VISA/MasterCard POS Merchant Terminals MasterCard/China Union Products Half-Year 2014 Investor Presentation - August, 2014 20#21THANK YOU Q&A Half-Year 2014 Investor Presentation - August, 2014 CAL Bank Bank on Our Service 21