Ecobank Ghana shows resilience amidst challenges

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IN spite of an increase in impairment charges, on the back of a tough business operating environment in 2016 and extremely competitive market, Ecobank Ghana Limited grew its revenue by 18% over that of the previous year.

Total revenue for 2016 stood at GH¢1.2billion compared with GH¢1.02millon in 2015. This growth was, according to the bank, driven by “gains from de-recognition of financial assets relating to the oil sector.”
Per the increase, the Board of Directors of the bank declared a dividend of 82 pesewas per share for the bank’s shareholders.
Addressing shareholders of the bank at its Annual General Meeting (AGM) last Friday in Accra, the Chairman of the Board, Mr Terence Darko, disclosed that “in an extremely competitive market and faced with tightening liquidity,” Ecobank Ghana was able to maintain a positive liquidity gap, growing its deposits by 12% over the previous year.
With a capital adequacy ratio of 15.29%, obviously a healthy mark-up against the regulatory benchmark of 10%, the bank had subscribed to high standards of capital arrangements which would ensure that “our business continues to run even in the most unlikely and unpredictable economic scenarios.”
Mr Darko admitted that even though the bank’s non-performing loans ratio had reduced by 2.13% from 18 to 15.87%, its loan book impairments had continued to pose a major challenge to efforts to improve overall financial performance.
For instance under corporate and investment banking, increased loan book impairments drove down the bank’s profit before tax from GH¢273million in 2015 to 253milion in 2016.
According to the bank, when compared to the previous year, impairment provisioning went up by GH¢41 million while the bank’s operating costs also rose by 13% (year-on-year) driven by cost pressures arising from high inflation experienced in the country during 2016.
Overall, profit before tax was 8% lower than the previous year, the bank stated in its annual report on the financial year under review.
Its net interest income increased from GH¢682 million to GH¢719 million while net fees and commission, which had hitherto been regularly impressive, declined by 15% from GH¢185 million to GH157 million, attributable to lower transaction volumes associated with the operating environment.
The bank’s operating cost also jumped by 26% over the previous year; however, its cost to income ratio was impressive at 46.94%.
“This ratio compares favourably with the industry average and is a testament to the improvement in our return on assets and successful outcomes of our cost cutting initiatives,” Darko observed.
In spite of the drawbacks, the Board Chairman noted that Ecobank had continued to demonstrate its resilience with an impressive and commendable return on equity of 35% in the year under review.
The Managing Director of the bank, Mr Daniel Sackey, stressed management’s commitment to deepen financial inclusion by “leveraging the rising trends in mobile adoption across the country to improve convenience and accessibility for you our cherished clients.”
Ecobank Ghana in 2016 successfully introduced the Ecobank Mobile App to aid its customers to make instant payments and to receive funds from any bank with Ghana and across all 33 countries in Africa where the bank operates.

Source: Isaac Aidoo || The Finder

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