Ecobank cements top spot with 22% revenue CAGR over 5 years

Ecobank Ghana and its subsidiaries have reported impressive growth in its core business activities over the past five years.

The group’s revenue has witnessed a compounded annual growth rate (CAGR) of approximately 22 percent over the period, analysis of its financials shows, jumping from GH¢1.59billion in 2019 to GH¢5.33billion in 2023.

This comes with its banking arm being responsible for 98-plus percent of the growth across all metrics. Notably, revenue grew by 16 percent in 2020, 14 percent in 2021, and a substantial 40 percent in 2022 before reaching its peak in 2023 with a 79.4 percent increase.

The group’s total assets surged to GH¢33.66billion in 2023, up from GH¢13.23billion in 2019. This represents a CAGR of approximately 18 percent over the five years, solidifying its position as the biggest financial operator in the country by assets.

Customer deposits have similarly exhibited consistent growth, reflecting increasing trust across the board. The metric grew from GH¢9.72billion in 2019 to GH¢11.8billion the following year. It rose to GH¢13.29billion and GH¢20.4billion in 2021 and 2022, respectively. The rise in customer deposits was particularly strong between 2022 and 2023, with an increase of 29 percent to reach GH¢26.34billion.

Ecobank has also played a more active role in credit intermediation, as evidenced by the steady rise in loans and advances to customers. These loans and advances grew from GH¢5.38billion in 2019 to GH¢9.52 billion in 2023, reflecting a CAGR of approximately 13 percent. While loan growth dipped slightly in 2020 compared to 2019, it bounced back in 2021 with a 14 percent increase. There was a significant surge in 2022 with 56 percent and 7 percent in 2023.

Unsurprisingly, profitability has exhibited fluctuations, growing steadily from GH¢444.8million in 2019 to GH¢582million in 2021. The group experienced a loss of GH¢15.30million in 2022 on account of the domestic debt exchange programme (DDEP). It has since recovered, achieving a profit after tax of GH¢632.7million in 2023.

Bank in 2023

The bank, as an entity, concluded the year with a pre-tax profit of GH¢966million from its corporate, commercial and consumer banking operations. The first saw its revenue surging 68 percent year-on-year to GH¢1.5billion. This growth was driven by increases across all major product lines, with net interest income rising 81 percent YoY to GH¢505million due to elevated interest rates. The division’s profit before tax (PBT) also climbed to GH¢704million, attributed to revenue growth and asset recovery efforts.

Commercial banking recorded a 50 percent growth in revenue, driven by a combination of factors, including higher interest rates, strategic business initiatives and client relationship expansion. There was, however, an 11 percent dip in profit due to increased impairments and operating expenses.

The latter saw revenue up 36 percent YoY to GH¢1.6billion, with a growth in net interest income growth and cost discipline cited as the reason.

Overall, interest income – the lifeblood of many banks, surged by a significant 39.6 percent while operating expenses increased by 22.7 percent.

The bank’s return on equity (ROE) and return on assets (ROA) stood at a commendable 20 percent and 2.1 percent, respectively. Moreover, Ecobank’s capital adequacy ratio of 13.49 percent exceeds the regulatory requirement of 10 percent.

Vantage point

Speaking during the bank’s Annual General Meeting, the Chairman of its Board, Samuel Ashitey Adjei, said despite the broadly difficult operating environment, the performance in 2023 was possible because of the bank’s capital base, new business strategy and leadership.

“(We are) in a vantage position to leverage the growth opportunities across the economy. The bank is committed to realise its goals by focusing on major areas such as profitability, the latest digital technology and social performance.”

The meeting saw the formal confirmation of the appointment of Abena Osei Poku as Managing Director by shareholders. Additionally, no dividends will be paid, in line with Bank of Ghana directives.

The market is yet to react to the results as the bank’s share price on the Ghana Stock Exchange has remained flat at GH¢6.1 since the middle of March 2024. However, it has appreciated by 10.9 percent since the turn of the year.