Ecobank sees turnaround of East Africa units
Posted Monday, June 18 2012 at 20:37
Togo-based Ecobank Group is expecting to turn around the loss making East African business into profitable operations this year.
Arnold Ekpe, the bank’s outgoing group chief executive officer, on Friday said high costs of setting up East African subsidiaries, which are in the five countries, saw it post a pre-tax loss of Sh298 million ($3.5 million) last year compared to Sh256 million ($3 million) in the previous year.
The Francophone West Africa region posted the highest profits followed by the rest of West Africa, Nigeria, Central Africa and the international business, which consists of offices in Dubai, Paris and London.
The South African region which consists of the Democratic Republic of Congo, Malawi and new markets of Zimbabwe and Zambia made the highest loss, trailing the East Africa operations.
“We are new to East Africa, you need to invest before you can make a return and the costs that we incurred are entry costs. We expect that as we settle down it will become profitable,” said Mr Ekpe, during a press conference at the group’s annual general meeting in Lome, Togo.
Combined revenues for the East Africa region grew by 14 per cent to Sh4.86 billion ($57.2 million) with Burundi, Uganda and Tanzania providing higher margins and loan growth according to the bank’s annual report, which notes that results from Rwanda and Kenya remained flat due to difficult business environments.
Net interest income went up marginally by four per cent pulled down by a 31 per cent decline in Kenya according to other disclosures contained in the banks’ annual report, which also notes that results in Kenya and Rwanda adversely affected the overall efficiency ratio of the regional cluster.
“With a turnaround in Kenya and Rwanda and continued momentum from aggressive marketing of our flagship products, East Africa’s performance is expected to improve significantly in 2012,” notes the annual report.
Its Kenya subsidiary posted a Sh202 million in profits after tax last year compared to Sh125 million in 2010 after it increased its branch network over to 24 from 19 while interest paid on deposits jumped by 47 per cent to Sh732 million.