Ecobank Zimbabwe's profit jumps 2300%

Ecobank Zimbabwe's profit jumps 2300%
Published: 27 August 2013
ECOBANK Zimbabwe's profit before tax leapt 2 300 percent to $1,2 million in the half year to June largely driven by growth in interest income. Interest (US$4,6 million) and non-interest income ($4,3 million) grew 116 percent and 38 percent respectively, pushing the bank's net revenues up 58 percent to $7,9 million.

Ecobank said increased interest income resulted from a bigger customer base, lower cost of funds and $50 million lines of credit support.

"Ecobank has grown its net operating revenue by 58 percent year-on-year, on the back of fresh capital, increased trade finance activities, reduced cost of funds and an increased customer base driven by a wider network of branches and ATMs," said Ecobank chairman Mr David Whatman.

Ecobank said deposits grew 9 percent in the interim period to US$78,1 million while loans declined slightly, falling 2 percent to US$80,1 million.

Operating costs increased by 36 percent year-on-year, driven by investments in distribution network, human capital and enhanced technology infrastructure for excellent services to a growing customer base.

Higher allowances for loan impairments were made to reflect the growing loan book together with a prudent approach to increasing non-performing loans coverage ratio, which stood at 88 percent at the end of the period.

Ecobank contends that the marked improvement in the cost-to-income ratio from 94 percent in June 2012 to 76 percent in June 2013 provides proof that the bank's investments have started yielding positive results as a critical mass of business is achieved within the established cost base.

Operating costs are expected to continue growing in line with the organic business growth initiatives, but a decline in the rate of growth of costs is expected due to strong focus on cost control and enhanced efficiencies.

Managing director Mr Daniel Sackey said Ecobank Zimbabwe aims to build a bank which not only provides total banking solutions to individual customers, but also a differentiated trade and commodity finance business, leveraging on lines of credit and capabilities of the Ecobank Group.

The bank will continue investing in people and systems needed to ensure it guarantees delivery of innovative solutions to individual and corporate customers.

"The bank will continue to implement the strategic expansion of its distribution network via new branches, ATMs, merchant Point of Sale devices and mobile banking. This growing network will be able to better serve customers and deliver a more diversified product range," said Mr Sackey.

The marginal 9 percent growth in the bank's deposit base recorded during the half year is expected to improve during the second half of the year as the various deposit mobilisation initiatives start bearing fruits.

To further strengthen the bank's balance sheet and to comply with regulatory minimum capital requirements, shareholders injected US$8 million into Ecobank Zimbabwe's operations during the period under review.

This brings the bank's total capital contributions by shareholders to US$42,8 million since the launch of Ecobank Zimbabwe in 2011. Tier I capital of the bank stood at US$36,4 million while the capital adequacy ratio was 30,53 percent, well above the regulatory minimum of 12 percent.

Mr Whatman said total assets reached US$120,2 million, up 15 percent on the December 2012 position. This was attributed mainly to a 9 percent growth in deposits and a 28 percent increase in shareholders' equity.

Ecobank opened new branches in Mutare, Kwekwe, Chiredzi and Chitungwiza in the period to bring the total number of branches to 11. Plans are underway to add at least three more branches before year end.

Significant investment continues to be made towards process automation as this is pivotal to providing world class service to customers and equipping the bank with cost-efficient operational solutions.
- herald
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