Ecobank gets Sh2.1bn from parent firm for expansion
An Ecobank branch. The lender expects to change its fortunes through accelerated expansion. Photo/File
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On Tuesday, the lender announced the second equal tranche of Sh2.1 billion as it more than halved its half-year losses.
The cash will roll out new branches and increase its lending capacity as it races to wipe away the red ink. The Kenyan unit, with a network of 25 branches, expects to change its fortunes through accelerated expansion.
Ecobank Kenya has for the second time in six months secured capital injection from its Togo-based parent company, bringing the total to Sh4.2 billion.
On Tuesday, the lender announced the second equal tranche of Sh2.1 billion as it more than halved its half-year losses.
The cash will roll out new branches and increase its lending capacity as it races to wipe away the red ink.
Ecobank’s loss for the six months to June was down 55 per cent to Sh269.7 million helped by an eight-fold growth in net interest income and falling deposit interest.
The Kenyan unit, with a network of 25 branches, expects to change its fortunes through accelerated expansion.
“Ecobank is determined to grow its portfolio in the Kenyan market and, therefore, needs resources and capacity to achieve this,” said Ehouman Kassi, the bank’s managing director, in an interview with the Business Daily.
Mr Kassi, who assumed position in May, attributed the half-year loss to a deposit mix that is predominantly based on expensive term deposits, which the bank plans to retire and mobilise cheaper deposits.
“We will focus on raising deposits from current and savings accounts, which attract low-interest expenses.”
Its deposit costs dropped to Sh926 million from Sh1.3 billion, translating to savings of Sh418 million.
Ecobank plans to roll out agency banking by the end of the year and increase uptake of mobile and Internet banking as it seeks to generate higher income.
The lender saw its loan book increase by Sh1.8 billion in the three months to June as it benefited from a drop in cost of credit and the peaceful March 4 elections.
The bank’s deposit base grew to Sh23 billion as at June from Sh19 billion a year earlier.
The pan-African bank says it will leverage on technology and its network in the continent to offer corporate banking products targeting cross-border businesses. Ecobank launched operations in South Sudan in July this year making it the 34th affiliate in Africa.
The bank posted a net loss of Sh1 billion last year, blamed on costly deposits. It had made a net profit of Sh202.1 million in 2011 compared to Sh125.1 million a year earlier.
Ecobank entered the Kenyan market in mid-2008 after acquiring the loss-making EABS Bank.
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