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Ecobank could quit African markets as profits slump

Ecobank could quit African markets as profits slump

Banking

Chairman of Ecobank, has told Reuters that the pan-African bank could pull out of some African countries as part of reviewing its expansion strategy, with decisions expected to be taken in months.

According to Emmanuel Ikazoboh, who is chairman of parent company Ecobank Transnational Incorporated (ETI), the move has been made necessary after a decline in profits, hence the decision to focus on its most promising markets.

“The business model whereby we are just expanding and posting our flags (in different countries) has to be reconsidered,” Ikazoboh said in an interview on Friday after the bank’s annual shareholder meeting at its headquarters in Lome.

The business model whereby we are just expanding and posting our flags (in different countries) has to be reconsidered.

Ikazoboh further disclosed that Ecobank was dividing its operations into three “pockets” according to their potential, ETI had $22.5 billion of assets in 2013 and employs over 20,000 people.

Ecobank’s biggest operation is in Nigeria where the bank wants to increase market share. It also sees Kenya as its pivotal market in East Africa and hopes to take advantage of Rwanda’s rapid economic growth, spokesman Richard Uku said.

“In the last ‘pocket’ (of least promising countries) we really want to take a decision as to whether we continue to operate in those markets,” said Ikazoboh.

The bank is based in Togo and operates in 36 other African countries, making it a rare example of a pan-African bank that has developed outside South Africa, home to giants such as Standard Bank and FirstRand.

The bank has however been affected by the falling global commodity prices that have hit economies in especially, Nigeria and Ghana, causing revenue to slow, profits to fall and triggered a shift in approach.

Facts from Ecobank’s annual shareholders meeting

  • Ecobank’s pretax profit was $205 million in 2015
  • Drastically down from $520 million in 2014
  • CEO Ade Ayeyemi described pretax profits as “unquestionably disappointing”.
  • The bank said in April it expected flat loan growth and revenue this year.
  • Ecobank would pay a dividend of $48.2 million

Reuters