ETI to increase profitability

Ecobank Transnational Incorporated (ETI) is seeking to increase its profitability by becoming exceptionally disciplined in the way it allocates capital and expenses.

“We want to continue returning equity which is greater than cost of equity. If you look at where we are today, we have gone through lots of acquisitions; but we are consolidating and making the things acquired work and deliver value for shareholders and stakeholders,” said Group Managing Director Ade Ayeyemi.

Speaking as the bank took its turn at the Ghana Stock Exchange’s (GSE) Facts Behind the figures session, Mr. Adeyemi told brokers, analysts, and investors: “If you make good investments, you generate good returns”.

Moving forward, the Group CEO explained that the bank’s plan toward increased profitability is to defend and strengthen its position in countries where the bank is number-one or in the top-three; but in countries where its position is lower, the bank will just focus on increasing profitability instead of becoming bigger.

“We are working and making sure that we continue to renew ourselves as an organisation. That is the strategy and how we see the future. We were born on the continent and recognise the continent’s needs,” he added.

ETI’s net revenue dropped by 8 percent from US$2.28billion in 2014 to US$2.11billion in 2015, which saw profit before tax also drop by 60 percent from US$520million to US$205million over the same period.

The drop in revenue and profits was as a result of high impairment losses which increased by 99 percent from US$267million to US$532million from 2014 to 2015. Profit after tax dropped by 73 percent from US$395million in 2014 to US$107million in 2015. NPLs increased from 4.4 percent in 2014 to 8.2 percent.

While cost to income ratio dropped marginally from 65.4 percent in 2014 to 64.9 percent in 2015, return on equity dropped drastically from 16.5 percent to 4.2 percent in 2015.

But Mr. Ayeyemi, alluding that the high NPL rates relate to the sharp drop in oil price to a record low of less than US$40 a barrel in recent times, has stated that the bank is working to reduce its huge NPL ratio.

“We are doing everything we can, we are working with our customers, we are working with the rest of the market. In some situations, we need to do collection whiles in some situation we need to focus on approaching the customers to make sure that non-performing loans are reduced,” he said.

According to him this development is not peculiar to Ecobank, since most companies make projections in the oil market that do not come to fruition.

“The price of oil has come down; if it was 100 dollars today some of the oil companies would be buying more private jets - but it has come down to under 50, that’s what it is,” he said. He stated his optimism about companies paying their debts when the oil price recover.

Mr. Ayeyemi said the bank is looking at driving customer excellence, with the focus on superior customer experience and leveraging on distribution and cost leadership, while strengthening risk management.

He added that the bank will make a decision soon on the appointment of a new MD for its Ghana operations.

Touching on the bank’s appointment of a substantive Managing Director, Mr. Ayeyemi disclosed that the Group is in the process of finding a replacement for former Managing Director Samuel Ashietey Adjei after reassigning him to head the bank’s combined region of Central, Eastern, and Southern African (CESA) countries made up of 18 subsidiaries.

He assured shareholders, customers and other industry players that the current management team led by Morgan Asiedu and the Board are steering affairs of the bank smoothly.

“We as an organisation have one or two strategies. Either you have crown princes or you make sure every position is competed for. We choose to make every position competed for, so we don’t have crown princes,” he said.