Ecobank on Zim expansion drive

HARARE - Togo-Based Ecobank International plans to expand its footprint in Zimbabwe.

The financial group, whose local unit Ecobank Zimbabwe Limited (EZL) already has 11 branches across the country, says it will open three more this year.

“Ecobank aims to build a bank which not only provides total banking solutions to individual customers, but is also a differentiated trade and commodity finance business, leveraging on lines of credit and the capabilities of the Ecobank Group,” said Daniel Sackey, EZL’s managing director.

The Pan African bank, which ventured into Zimbabwe in 2010 after acquiring a 70 percent stake in then Premier Finance Group, is expanding operations at a time most banks in the country are scaling down operations due to working capital constraints and increasing costs.

Zimbabwe’s financial sector is currently constrained by acute liquidity challenges.

Sackey said EZL will remain focused on investing in skills and systems that guarantee innovative solutions.

“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,” he said.

Since entering Zimbabwe, Ecobank International — with operations in 32 countries, has invested nearly $43 million.

Early this year, Ecobank International’s chief executive Thierry Tanoh  (pictured) said the group’s Zimbabwe operation would increase its market share by grabbing every “tremendous opportunity that comes along.”

“There are some banks in the country that have benefitted from historical positioning but we are ambitious and young. Right now we are really focusing on organic growth,” he said.

Meanwhile, EZL’s profit before tax surged 2 300 percent to $1,2 million in the half year to June 2013, largely driven by growth in interest income.

David Whatman, the EZL’s chairman said interest grew 116 percent to $4,6 million while non-interest income increased by 38 percent to $4,3 million, pushing the bank’s net revenues up 58 percent to $7,9 million.

The group 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 Whatman.

Deposits grew nine percent in the interim period to $78, 1 million while loans declined slightly, falling two percent to $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.

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