Ecobank Uganda posted profits for the first time since joining the Ugandan market in 2008.
The bank made a net profit of Shs813m in 2016, up from a loss of Shs764m in 2015.
The bank also saw its loans advanced to customers slightly increase to Shs117.3bn, up from Shs116.9bn in 2015.
Customer deposits also increased to Shs213.9bn in 2016, up from Shs207.46bn, representing 3.1% growth.
The bank’s Non-Performing Loans (NPLs) and bad loans written off also reduced significantly. However, its assets reduced to Shs280.4bn, down from Shs285.7bn in 2015 although management says it was strategic.
This impressive turnaround raises pertinent questions: what are the key factors behind this turnaround? Why has the bank been performing poorly in the past years? Will it sustain the profitability trend?
In an exclusive interview with Business Focus on Tuesday, Clement Dodoo, the Managing Director at Ecobank Uganda revealed that bank posting profits in 2016 wasn’t by ‘chance’.
“We had strategies and clear directions,” Dodoo said, adding: “We had stringent and better management of the balance sheet. We also had to do away with expensive deposits which would have affected our profitability.”
Dodoo, who believes in teamwork added that in 2016, they also focused on reducing NPLs and bad loans.
It is for this reason that the bank’s loans to customers increased by just Shs40m.
“We worked hard on collections, cut on our costs and generally improved on customer service,” Dodoo said. Indeed the bank’s expenses reduced to Shs39.5bn, down from Shs44.1bn.
He added that 2016 was a hard year for regional focused banks like Ecobank, noting that the war in South Sudan slowed down business activity.
Joining Ecobank Uganda
It is worth noting that Dodoo joined Ecobank Uganda in early 2015 from Ecobank Sierra Leone, where he left an indelible mark due to his excellent performance.
Dodoo replaced Michael Monari, who was recalled to the Group’s head offices in Togo.
In 2009 (the first full year of operation), Ecobank posted losses of shs14bn before reducing to Shs6.4bn in 2010 and Shs600m in 2011.
During this period, Dele Alabi, the Ecobank Uganda pioneer Managing Director was in charge.
Monari joined Ecobank Uganda in October 2011, but in 2012, losses shot up to Shs12.2bn and Shs17.2bn in 2013. The following year, the bank made a loss of Shs5.2bn.
Asked on allegations that some local banks depend on their head offices for decision making, Dodoo said international banks have standards and let their subsidiaries take independent decisions.
“Ecobank Uganda is independent. If we were stringent like the Group, we would have probably not made such losses in the past. There is no policy to weaken the affiliates; the Group doesn’t interfere with the decisions of the affiliates,” he clarified.
Bright Future
Asked on whether Ecobank Uganda will sustain the profitability trend, Dodoo said the bank was past the dark days.
“We know where our problem was; delinquent loans (delayed payments on loans/Non-Performing Loans), but we have got an antidote to that.
We are looking forward to better customer service and growth,” an optimistic Dodoo said.
He explained that the digitization that they have put on market will make a huge difference in terms of efficiency, asset growth, diversity, cutting costs and promoting financial inclusion.
He believes that loans to customers will grow by 25-30% in 2017.
Our interest rates have been reducing since last year. Our average lending rate stands at 18%.
“We are going to embrace agency banking, Islamic banking and bancassurance,” he said of the future.
He added that they will continue to focus on key areas like cutting on costs and NPLs.
“We shall continue to focus on customer service and being innovative on products that will enable the bank grow,” he said, adding: “The economy is a bit slow; customers don’t want to borrow, but there’s a great future for the economy.”
Pan-African Bank
He noted that Ecobank is unique in the sense that it is a bank for Africans and run largely by people from across the continent.
“We don’t just appear in the country and take its resources. We are a Pan-African bank with operations in 36 African countries,” he said, adding that the Group employs 45 nationalities.
Ecobank is a full-service bank providing wholesale, retail, investment and transaction banking services and products to governments, financial institutions, multinationals, international organisations, medium, small and micro businesses and individuals.
Last word
“We thank our customers who have continued to believe and trust us. We shall continue to give them the best service,” he said, adding: “We thank the regulators and partners for guidance and support. We promise to give the best service to the populace.”
