Ecobank returns to profit zone on loan earnings

Corporate News

Ehouman Kassi, incumbent chief executive, was appointed in May 2012 to take charge of the bank. PHOTO | FILE 

By DAVID HERBLING

In Summary

• Ecobank Kenya posted a net profit of Sh90.3 million in the year ended December compared to a loss of ShSh320 million a year earlier.
• The local unit, with a network of 29 branches, has consistently been turning to the parent company for capital injection to fund growth.

Ecobank Kenya has returned to the profit zone after a three-year loss-making streak, reaping from increased lending and a higher loan book quality.

The mid-tier lender — wholly owned by Ecobank Transnational Inc — posted a net profit of Sh90.3 million in the full-year ended December 2015 compared to a loss of ShSh320 million a year earlier.

Net interest income grew by three-quarters to reach Sh1.7 billion as the bank’s loan book grew by a third to Sh29.6 billion, Ecobank said in a trading update.

Loan impairment costs was at Sh48 million last year compared to a provision of Sh757 million in the year 2009, reflecting better asset quality at Ecobank that bucked the industry trend.

Ecobank Kenya said gross non-performing loans remained flat at Sh2.4 billion.

Non-funded income rose by a tenth attributed to higher earnings from trade financing and forex trading.

The Kenyan unit, with a network of 29 branches, has consistently been turning to the parent company for capital injection to fund growth.

Ecobank Transnational Inc. injected an additional capital investment of Sh4.325 billion in November 2014, adding to the Sh2.1 billion received in the first half of 2013 and a similar amount a year earlier.

The bank’s deposit base grew by Sh2 billion to Sh34.4 billion. Interest expenses ballooned by a quarter to reach Sh2.4 billion.

The pan-African bank said it would leverage on technology and 33-country network in the continent to offer corporate banking products targeting businesses with cross-border operations.

Ecobank Kenya has traditionally relied on foreign executives to run the bank.

Ivorian Ehouman Kassi, incumbent chief executive, was appointed in May 2012 to take charge of the bank.

READ: Ecobank replaces Kenyan unit CEO with Ghanaian executive

Mr Kassi succeeded Anthony Okpanach from Nigeria who was at the helm of Ecobank since its entry to Kenya.

Ecobank entered the Kenyan market in mid-2008 when it bought a 75 per cent in the loss-making East African Building Society (EABS) owned by the Pandit family.