CAL Bank: Earnings Recovery Signals Upgrade, Buying While It Is Still Affordable

CAL Bank’s 1H 2026 performance points to a meaningful recovery in earnings fundamentals, supported by stronger deposit mobilisation, improving funded income, and a more diversified revenue base. Against this backdrop, we assign a BUY rating on the stock with a 12-month target price of GHS1.05/share, implying an upside potential of 35% from current levels.

A key driver of our positive outlook is the bank’s 30.9% year-on-year growth in customer deposits, which has strengthened funding capacity and improved prospects for net interest margin expansion. Consequently, net interest income surged 82.9% year-on-year to GHS347.5 million in 1H 2026, while net fees and commission income increased by 32.6% to GHS126.3 million, highlighting broader earnings recovery.

Investment Rationale

Our positive view on CAL Bank is underpinned by four key factors:

• Improved net interest income, driven by the recovery in Current Account and Savings Account (CASA) deposits, which provide a relatively cheaper source of funding.
• An optimal earning asset mix, supported by strong growth in investment securities, helping balance risk and return considerations.
• Greater earnings diversification, with stronger contributions from trading income and fees and commissions reducing reliance on traditional lending income.
• Improved earnings visibility, which should support a recovery in return on equity and enhance overall shareholder value.

Q2 2026 Earnings Review

CAL Bank delivered a strong operational performance in Q2 2026, with operating income increasing by 75% year-on-year to GHS359 million, outperforming our expectations by 23%. Growth was broad-based across key revenue lines.

Net interest income rose 61% year-on-year to GHS178 million, benefiting from stronger funding and earning asset growth. Net fees and commission income increased by 33% to GHS69 million, while trading income surged 153% year-on-year to GHS108 million, underscoring the growing contribution of non-funded income to overall profitability.

A notable highlight was the significant improvement in asset quality charges. Impairment expenses declined by 97% year-on-year to GHS4 million, compared to GHS129 million in Q2 2025, providing additional support to earnings.

While net profit of GHS129 million was marginally lower than the exceptionally strong Q2 2025 level, it represented a 26% quarter-on-quarter improvement and exceeded our expectations by 39%, reinforcing signs of an ongoing earnings recovery.

Balance Sheet Strengthening

CAL Bank’s balance sheet continued to improve during the quarter. Customer deposits increased by 30.9% year-on-year to GHS10.7 billion, providing a stronger and more stable funding base. The loan book expanded by 26% year-on-year to GHS1.7 billion, while investment securities grew by 51% year-on-year to GHS7.7 billion, supporting revenue generation and balance sheet resilience.

The bank’s capital position also strengthened significantly, with shareholders’ equity rising 338% year-on-year to GHS1.76 billion, reflecting improved financial flexibility and a stronger foundation for future growth.

Outlook

CAL Bank’s latest results suggest that the earnings recovery story is gaining traction. Strong deposit growth, improving net interest income, expanding non-funded revenue, and significantly lower impairment charges are enhancing earnings visibility and supporting shareholder value creation.

Given the improving fundamentals and attractive valuation, we maintain a BUY recommendation on CAL Bank with a target price of GHS1.05/share, believing the stock offers compelling upside while it remains attractively priced.