Ecobank Group to pursue organic growth
Pan-African bank, Ecobank Transnational Incorporated (ETI), plans to focus on organic growth to expand its frontiers on the African continent.The bank has, however, not ruled out any opportunity to merge or acquire another bank as it embarks on this growth path.
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Addressing investors at the Facts Behind the Figures session on the Ghana Stock Exchange (GSE) in Accra, the Group’s Chief Executive Officer, Mr Ade Ayeyemi, said in positioning Ecobank for the next phase of growth, the strategy was to employ an organic growth approach.
“Our strategy is through organic. However, when we see opportunities, we are not going to throw it away. So if there are opportunities that come our way, we will take a look at it, but then our main strategy is to grow organically,” he said.
He said the bank would clarify its portfolio strategy across countries and businesses, maximise value of portfolios, increase market share and improve profitability and return metrics as well as defend the bank’s leadership position in West Africa.
Disappointing results
The pan- African bank posted a profit before tax of US$205 million on revenue of US$2.1 billion for its 2015 results. This compared to US$520 million and US$2.3 billion for 2014 respectively.
Mr Ayeyemi said, “Our 2015 results were disappointing. We did a comprehensive review of our processes and portfolio leading to elevated impairment charges in the fourth quarter. Impairment losses were significantly increased by US$265 million to US$532 million. This was unacceptable to us, and we have taken drastic steps to address asset quality and strengthen our processes.
“Also, we were faced with a difficult operating environment due to the slowdown in economic growth across Africa, as a result of lower commodity prices. These developments affected both households and businesses. Our cost-income ratio was 64.9 per cent, flat compared to prior year.”
Mr Ayeyemi concluded: “Our diversified business model is a source of competitive strength and stability. In the last few months, management and I have worked to revise our strategy and operating model around our customers, our products, and our geographical footprint. We have made some management changes and developed a strategic plan aimed at ensuring that we generate sustainable long-term performance.”
Market strategy
Mr Ayeyemi explained that, in reinforcing its market position in Middle Africa, the bank would defend its competitive position in countries where it was part of the top three banks in the market.
“There are opportunities for growth in our top four to 10 markets. We will invest to capture market share because growth prospects are likely to require capital. Nigeria, Democratic Republic of Congo (DRC) and Cameroon are key,” he said.
The bank, he also said, would revisit its investment strategy in high potential markets and consider constructive exit for low potential markets.
Creating shareholder value
Mr Ayeyemi said creating value for the bank’s shareholders remained at the core of their strategy going forward.
“We need to improve our customer service because at the end of the day, customers have choices. When someone comes in for a service, and it is not delivered, in my moral accord that is stealing because I am being paid even though I am not delivering the service,” he said. — GB
