Background
In October 1985 the first Ecobank affiliate opened in Togo. Despite the political upheaval of the 1980s in Africa, and against all odds, the Ecobank Group opened branches in five African countries in 1988. From 1997 to 2001 the group’s coverage increased from five to twelve countries.
Today, the Ecobank Group is a world-class institution and a torchbearer for Africa. With a presence in 35 sub-Saharan African countries, the Ecobank brand is synonymous with banking in Africa.
Ecobank continues to pledge its commitment to economic development across sub-Saharan Africa.
The 14-member Board and Management team of ETI are led by Alain Nkontchou and Jeremy Awori.
Financials
Group profit attributable to shareholders of ETI in 2023 was $288 million, slightly higher than $286 million in 2022. The increase was due to solid underlying growth in both funded (net interest income) and non-funded (non-interest revenue) revenues, disciplined cost management, and stable credit costs across all business lines. However, higher profits available to non-controlling shareholders partially offset this increase.
Group profit before tax increased by 8 percent in 2023, or 34 percent when adjusted for foreign currency translation effects, to $581 million. This growth was primarily due to revenue growth outpacing expense growth, which resulted in positive operating leverage. As a result, the pre-provision, pre-tax operating profit (PPOP) reached $951 million in 2023, representing a 17 percent increase from 2022 or a 43 percent increase at constant currency.
Group net revenue (net interest income plus non-interest revenue) in 2023 was $2,064 million, increasing by 11 percent or 31 percent at constant currency. For the first time since 2015, net revenues exceeded the $2.0 billion mark, demonstrating proof of early successes in some of the strategic choices we are taking to diversify and grow our revenues under our GTR strategy.
For example, Consumer and Commercial Banking businesses increased their share of group-wide revenues and profits. The higher interest rate environment benefited net revenue growth, particularly in Anglophone West Africa (AWA) and Nigeria, where net interest margins increased and significantly higher fees from treasury services, solutions, and cash management.
Group pre-provision, pre-tax profit (net revenue minus total operating expenses), a key metric for assessing the bank’s earnings power, increased 17% or 43% at constant currency to $951 million.
Group operating expenses for 2023 were $1,113 million, increasing by 6% or 22% at constant currency. This increase was primarily driven by a mix of inflationary-driven costs, staff-related costs, and costs associated with business growth, distribution, and technology. The primary drivers of this increase were communications and technology, other administrative, insurance, and professional and legal costs. However, some offsetting factors included decreases in AMCON costs, tax, and depreciation and amortization expenses. The cost-to-income ratio, which measures efficiency, improved to 53.9% in 2023 from 56.4% in 2022.
Group gross loans and advances (EOP) were $11.1 billion on 31 December 2023, compared to $11.5 billion on 31 December 2022. The year-on-year (YoY) decrease of 4% was primarily driven by foreign currency translation effects resulting from significant weaknesses in the local currencies of some of our subsidiaries versus the US dollar, such as the Nigerian naira, Ghana cedi and Zimbabwe dollar. However, gross loans and advances increased by 15% at constant currency, reflecting underlying loan growth across business lines and regions, particularly in trade loans within Corporate Banking within UEMOA and CESA.
The Group’s customer deposit base (EOP) remained stable and diversified, with approximately 83% (82% in 2022) of customer deposits in ‘sticky’ and less volatile current and savings accounts (CASA).
“Net revenue exceeds $2.0B for the first time since 2015; early proof of GTR success. ROTE: 24.9%, Cost-to-income: 53.9%, Loans-to-deposits: 55.4% and Total CAR: 15.0% Stable credit quality with NPL ratio at 5.4% and cost-of-risk at 128 basis points. Results reflect the resilience of Ecobank’s diversified business model, efficiency, and stability”
For the year ended 31 December 2023, group-wide customer deposits were $20.0 billion compared to $20.8 billion as of 31 December 2022. The 4% decrease was predominantly due to currency translation effects. Excluding its impact, deposits increased by 18%, primarily driven by Consumer Banking, helping to increase CASA deposits and reduce the rise in the rates paid on funds in a competitive deposit market. Helping drive overall growth in the mix and growth in CASA deposits were deposit mobilisation campaigns conducted across our markets as part of the core activities to improve deposit pricing and mix.
Non-performing loans (impaired or stage 3 loans) were $600 million as of 31 December 2023, increasing 0.3% or 23% at constant currency. The ratio of non-performing loans to total loans (NPL ratio) was 5.4%, a slight deterioration from 5.2% in the prior year. Group-wide gross impairment reserves for expected credit losses of $519 million increased by 0.2% from $518 million in 2022. Compared to the preceding year, the slight increase is partly due to proactive impairment reserve builds in line with episodic stresses in the credit risk environment.
Regional performance
The Group’s pan-African operations are categorised into four geographical regions. These reportable regions are Francophone West Africa (UEMOA), Nigeria, Anglophone West Africa (AWA), and Central, Eastern and Southern Africa (CESA).
Nigeria
Nigeria’s profit before tax was $27 million in 2023 compared with $31 million in 2022, representing a decrease of 15 percent or an increase of 22 percent at constant currency. ROE was 4.5 percent, an improvement from 3.8 percent in the prior year. The operating environment in Nigeria in 2023 was very challenging. Inflation remained high and the Naira weakened by about 52 percent in 2023, following the removal of fuel subsidies and foreign-currency reforms in June by the Federal Government to boost US dollar liquidity, pricing, and investor confidence.
Net revenues decreased by 2 percent or increased 40 percent at constant currency to $234 million, benefiting primarily from the net impact of higher interest rates and income from client-driven treasury services and solutions. Net interest income of $138 million increased by 28 percent or 72 percent at constant currency, benefiting from higher market rates, partially offset by an increase in funding costs partly due to the impact on the price of funds from high deposit cash reserve requirements (CRR) and competitive deposit markets. Non-interest revenues of $97 million decreased by 27 percent or increased by 11 percent at constant currency, with increased market liquidity and volatility driving client-driven FC and fixed-income sales within CIB, partially offset by a decrease in merchant acquiring fees, particularly within Consumer Banking. In addition, non-interest revenue benefited from an approximately $20 million in one-off non-cash adjustment on loans that Ecobank Nigeria previously sold to Nigeria’s Asset Management Corporation of Nigeria (AMCON).
Management’s comment
Jeremy Awori, CEO of Ecobank Group, said: “2023 was a challenging year for many households, businesses, and governments across Africa due to higher inflation, higher interest rates, weakening currencies, and uncertainty in the economic outlook.
“We have worked closely with our customers and stakeholders through this period and managed to make progress in our new strategic agenda and grew our business. Ecobank generated a return on tangible shareholders’ equity of 24.9% despite the challenging operating environment in 2023. Profit before tax increased by 8% or 34%, at constant currency, to $581m. Net revenue exceeded the $2.0bn mark for the first time since 2015, increasing by 11% or 31% at constant currency to reach $2.1bn. This performance demonstrates proof of the early successes of the bank’s 5-year Growth, Transformation and Returns (GTR) strategy.
“Our encouraging results reflect a re-energised commitment to putting our customers first and the work we have started on revenue diversification, growth, and low-cost deposit mobilisation. For instance, our Consumer and Commercial banking businesses increased their share of group-wide revenues and profits. In addition, we continued our proactive approach to disciplined cost management, aimed at eliminating unproductive and wasteful costs and redirecting savings into investments in marketing and branding, sales capabilities, and technology that should drive returns in the future,” Awori added.
Growth strategy
Since finalising its GTR strategy, the group has moved quickly to take the necessary steps toward winning with its customers. “In January, we unveiled our new brand campaign, ‘A BETTER WAY A BETTER AFRICA,’ at the TotalEnergies CAF Africa Cup of Nations in Côte d’Ivoire 2023, in which Ecobank was a key sponsor. The campaign underscored our commitment to empowering our customers and showcased our digital network and continent-wide connectivity to help them meet their financial goals.
“Further, to set us up for success, we have made changes to our structure and executive management team to make us more effective. Martin Miruka joined us as Group Executive Transformation, Enablement and Customer Experience, a newly created role to help deliver the strategic imperatives of GTR. Anup Suri joined us as Group Executive for our newly combined Consumer & Commercial Banking businesses. Abena Osei-Poku joined us as Managing Director of Ecobank Ghana and Regional Executive of Anglophone West Africa, replacing Daniel Sackey upon retirement. Michael Larbie joined us as Group Executive Corporate and Investment Banking, replacing Eric Odhiambo, retiring at the end of April. Thierry Mbimi joined us as Group Executive Internal Audit and Management Services, replacing Mustapha Fall, who left in late 2022. These hires are critical to our future and will complement the talent here at Ecobank. They all bring a wealth of global and Africa experience in the financial services sector. As Group Executives, they sit on the ETI Group’s Executive Committee and report directly to me,”Awori disclosed.
Red Flags
1. Rising non-performing loan portfolio
2. Rising operating expenses
3. Weakening economies in Anglophone region
Green Flags
1. Structural and management changes
2. Unveiling a new brand campaign
3. Improved cost-to-income ratio.
