Analysts Wilfred Agyei Kofi Busia Kyei Rudolf Cofie

Tel: +233(0)302 251137

Weekly Markets Update Week ending March

FINANCIAL STATEMENT SUMMARY2015 2016 2017

INCOME STATEMENT GHS GHS GHS Interest Income 461,093 552,679 668,055Net Profit 160,042 7,203 145,166

BALANCE SHEET Total Assets 3,351,039 3,599,355 4,212,638Total Liabilities 2,845,176 3,096,587 3,565,211Total Equity 505,863 502,768 647,427

FINANCIAL RATIOSLiquidity &EfficiencyCurrent ratio Cost to income (%) 75.32 92.60 72.74Net interest Margin (%)

31.11 30.67 26.94

ProfitabilityNet Profit Margin (%) 34.71 1.30 21.73Return on Assets (%) 4.78 0.21 3.90Return on Equity (%) 31.64 1.43 22.42

Investor RatiosEarnings per share 0.2919 0.0132 0.2652Dividend per share 0.097 - -Price Earnings ratio 3.425 56.8 4.07

Asset QualityCapital Adequacy (%) - 18.2 21.1Non-Performing Loans ratio (%)

- 8.0 10.9

Cal Bank’s reported GHS 36.9 Million in profit (2017 full year)

Performance on the Stock Market

Cal Bank started 2017 at GHS0.75 and appreciated to GHS1.08 (as at December 2017), translating to a gain of 44%, reflecting positive sentiments towards the banking stock. The 44% gain is better compared to the -25% and -0.99% recorded the same period a year ago and in 2015 respectively.

The stock price has posted a 52-Week-High of GHS1.47, and a 52-Week-Low of GHS0.49, with a PE Ratio of 4x (Industry average is 9x), and an average price of GHS1.03 over the past 200 days.

Trading activity ended with a total volume of 190,655,468 shares of the bank exchanging positions during 2017, this was significantly higher than the 11,848,190 shares traded during 2016. Total value of shares traded amounted to GHS 146,915,513 significantly higher than the GHS 11,204,629 recorded in 2016.

2015 2016 20170.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%31.64%

1.43%

22.42%

Return on Equity (DuPont)

Gross yield on earnings assets Cost to funds ratio0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

59.06%

13.60%

68.24%

12.81%

52.12%

12.85%

Efficiency

2015 2016 2017

Supplementary Analysis

-800,000

-600,000

-400,000

-200,000

0

200,000

400,000

600,000

800,000

26,885

-59,261

241,588

556,554

-584,894 -593,823

552,441

-723,837

255,016

Cash Flows2015 2016 2017

Net Cash Flows from Operations reduced marginally from GHS556.55 Million to GHS552.44 Million in 2017. This was chiefly driven by the significant changes in customer loans and advances; customer loans increased by 50%. We advise management to tighten its credit administration since this could have impact on the NPL ratio.

Net Cash used in Investing Activities increased from GHS-584.89 Million to GHS-723.84 Million, mainly driven by increase in purchases of investment securities and intangible assets.

Overall, Cash and Cash equivalents declined slightly by 19.5% from GHS428.76 Million in 2016 to GHS512.38 Million.

ConclusionFrom our review, Cal Bank’s Balance sheet and Income statement for the period ending December 2017 has been resilient, as reflected in impressive profit growth, increased growth in interest income, as well as sharp increase in the Net Margin.

CAL is currently trading at GHS2.0. Based on our model, we estimate its year-end price to range between GHS1.15 and GHS1.21.

However, the recent positive sentiments on the stock

Our Opinion Short Term: HoldFEATURE FOR THE WEEK

Interest expenses Operating expenses

PAT0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

47.32%

30.28%34.71%

55.06%62.49%

1.30%

48.32%

35.62%

21.73%

Proprtion of Interest Income

2015 2016 2017

Interest Expenses as a proportion of Interest Income reduced from 55.06% to 48.32% in 2017. This is attributed to the 20.88% increase in interest income as against the 6.08% growth in interest expenses. Net Interest Income increased by 39% to GHS251.3 million in 2017.

Operating Expenses dropped 31.09% in 2017. However, Operating Expenses as a proportion of Interest Income decreased from 62.49% to 35.62%.

Profit after Tax as a percentage of Interest Income increased from 1.30% to 21.73% as a result of the significant growth in profit.

Return on Equity improved from 1.43% to 22.42% in 2017, this is attributed to the significant increase in profit, from GHS7.2 million to GHS145.17 million in 2017. Return on Asset also increased from 0.21% to 3.90% in 2017.Gross Yield on Earnings Assets reduced from 68.24% in

2016 to 52.12% in 2017, despite the growth in interest income. (Earnings Assets grew by 19% in 2017, while interest income increased by 20.88%).

Cost to Funds Ratio increased marginally by 12.85%, reflecting the 5% increase in customer deposits and the 33.98% increase in bank deposits.

2015 2016 20170

20

40

60

80

100

120

140

93103

132

Average collectionof interest on loans and advances

Days

Common Size Analysis

INVESTMENT TERM OF THE WEEKDiversification: This is a risk management technique that combines a wide variety of investments within a portfolio. The rationale behind this technique is that a portfolio constructed of different kinds of investments will, on average, yield higher returns and pose a lower risk than any

DeclinersTicker Price (GHS) ChangeEGL 4.80 -0.83%ETI 0.22 -12.00%GCB 4.75 -19.49%

GainersTicker Price (GHS) ChangeHFC 1.20 17.65%PZC 0.30 7.14%SOGEGH 2.00 3.09%GGBL 2.52 0.80%BOPP 7.02 0.43%SCB 34.50 0.29%UNIL 16.27 0.06%

Kofi B. Kyei Kofi B. Kyei

Kofi B. Kyei

2

EQUITY MARKET PERFORMANCE Indicator This week Previous

WeekChange Y-T-D

GSE Composite Index 3,246.61 3,309.93 -63.32 25.85%

GSE Financial Index 2,977.84 3,066.50 -88.66 28.88%

UMB 10 Index 1,264.82 1,295.83 -31.01 26.48%

Market Cap (GHSM) 64,391.01 65,397.85 -1,006

Value Traded (GHS M) 5.02 3.96 1.05

Volume Traded (M) 1.91 2.77 -0.86EXPECTED GSE PRICE MOVEMENT

EQUITY MARKET FLASH: Stock Market lose groundsThe stock market lost momentum during the week under review, driven by profit taking in the Enterprise Group, Ecobank Ghana, GCB Bank and Ecobank Transnational. The GSE CI shed 63.32 points to close the week at 3,246.61, with a Year-To-Date Change of 25.85%. The UMB 10 Index also closed at a Year-To-Date Change of 26.48%

HFC Bank was the lead advancer, appreciating by 17.65%. Six other equities registered gains, while three others declined.

A total volume of 1.91 million shares valued at GHS 5.02

COMMODITIES MARKETCommodity This

WeekPrevious Week

Change YTD (%)

Brent Crude Oil (US$/bbl) 65.19 64.17 1.02 21.35%Gold (US$/oz) 1,323.49 1,322.23 1.26 15.34%

Source: Bloomberg, ICCO

CURRENCY MARKET

MONEY MARKET HIGHLIGHTSGOG Treasuries

12th -16th Mar 18

5th -9th Mar 18

Change (%)

12th-17th Mar 17

91-Day T-Bill 13.35% 13.37% 0.02% 22.79%182-Day T-Bill 13.88% 13.89% -0.01% 17.16%1-Year Note 15.00% 15.00% 0.00% 19.00%3-Year Bond 18.25% 18.25% 0.00% 21.50%5-Year Bond 17.60% 17.60% 0.00% 18.75%Amount Raised (GHS MN)

666.00 841.00 1,028.00

Source: Bank of Ghana

NEWS FLASHBank of Ghana drags 30 microfinance companies to EOCO

The Central Bank has dragged the directors of 30 microfinance companies to the Economic and Organised Crime Office (EOCO) for investigations and prosecution for alleged embezzlement and fraud of over GH¢90 million belonging to depositors.

OTHER ECONOMIC DATAIndicatorInflation January 2018 10.30%Policy Rate January 2018 20.0%Real GDP Growth June 2017 7.8%

Top traders

Ticker Volume ValueGOIL 885,851 3,606,172SPL 482,200 9,644SOGEGH 141,594 278,539EGL 90,214 435,360GGBL 79,200 199,560

Ticker OUTLOOK REASONSOGEGH Speculation

SIC Improving bids

Interbank Average Rates

Currency Closing Week

Previous Week

Gain/Loss

GHS GHS 1- Mth Y-T-D

Dollar 4.419 4.418 0.00 -0.07%

Euro 5.445 5.447 -0.55 -2.73%

Pound 6.133 6.089 -0.48 -2.70%

3

NEWS FLASHBank of Ghana drags 30 microfinance companies to EOCO

The Central Bank has dragged the directors of 30 microfinance companies to the Economic and Organised Crime Office (EOCO) for investigations and prosecution for alleged embezzlement and fraud of over GH¢90 million belonging to depositors.

OTHER AFRICAN STOCK MARKETSCountry 9-03-18 Year

OpenChange Y-T-D

Botswana(BGSMDC) 8,687.50 8,862.22 -174.72 -1.97%

Egypt (EGX 30) 16,472.3 15,023.76 1,448.5 9.64%

Kenya (NSE ASI) 180.60 171.16 9.44 5.52%

Nigeria (NGSE ASI) 43,167.9 38,264.79 4,903.1 12.81%

South Africa (JSE ASI) 58,870.2 59,731.16 -860.99 -1.44%

Source: Bloomberg

Disclaimer: This document is not intended to be an offer, or a solicitation of an offer for the sale or purchase of any security. The information and opinions contained in this document have been compiled from or arrived at in good faith from sources believed to be reliable. Whilst care has been taken in preparing this document, no representation is given and no responsibility or liability by UMB Stockbrokers (UMBS), any member of UMBS or UMB Capital as to the accuracy of the information contained herein. All opinions and estimates contained in this report may be changed after publication at any time without notice.

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