Ecobank bounces back to profitability after tough restructure

Ecobank’s headquarters in Kigali. The Pan African lender will be closing five upcountry branches in Rwanda as it consolidates its digital strategy. PHOTO | CYRIL NDEGEYA | NMG 

In Summary

• The bank attributes the positive showing to a growing customer base, frugal lending and a shift to digital banking.
• Ecobank Transnational Incorporated (ETI) shareholders amounted to $179 million.
• The bank has closed more than 200 branches on the continent since 2015.

By IVAN R. MUGISHA
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Pan-African bank Ecobank is back to profitability with a profit before tax of $288 million in 2017, after a loss before tax of $131 million in 2016.

The bank attributed the positive showing to a growing customer base, frugal lending and a shift to digital banking, during its annual general meeting last week in Lome, Togo — home to its parent company, Ecobank Transnational Incorporated (ETI).

Profit attributable to ETI shareholders amounted to $179 million.

The bank has closed more than 200 branches on the continent since 2015. More than 70 of them were in Nigeria – its biggest market — while East Africa lost more than 20.

According Ecobank Group chairman Emmanuel Ikazoboh, the closure was forced by high costs of operation, which needed “radical surgery.”
He said that the bank had strengthened its underwriting and risk management processes.

The bank’s regional executive for Central, Eastern and Southern Africa, Samuel Ashitey Adjei said higher loss impairments in Tanzania, Kenya and Rwanda were offset by asset quality improvements in Chad and Congo Brazzaville, as a result of loan restructuring, and the reversal of provisions in Zimbabwe and Mozambique.

“Nevertheless, data integrity management in the region has continued to improve due to a bottom-up risk assessment, in which the subsidiaries’ risk information is aggregated at the group level.

“This is helping to ensure that a wide range of perspectives and critical analyses are incorporated to ensure balanced and objective risk management overall,” said Mr Adjei.

But Ecobank’s non-performing loans increased by 12 per cent from $948 million in 2016 to $1 billion in 2017.

The eastern, central and southern regions accounted for a combined 29 per cent of the bad loans. Nigeria recorded the single highest NPL ratio, accounting for 37 per cent. West Africa – minus Nigeria — recorded 34 per cent.