African bank Ecobank sees slower growth this year

Bloomberg

Ecobank Transnational Inc, the pan-African lender with operations in 35 countries, foresees slower growth this year as a devaluation of local currencies pushes up its costs and make it more difficult for its clients to do business.
The Togo-based lender predicts revenue growth will slow to 1% to 3% this year, from 5% in 2021, while loan extensions will probably increase by a maximum 3%, after growing 4% the previous year, Chief Financial Officer Ayo Adepoju said on an investor call on Thursday. Customer deposits are likely to rise by 3% to 5%, down from 8%, he said.
All but three of the 19 African currencies monitored by Bloomberg have weakened against the dollar since the start of March 2020, the month that the coronavirus was first detected on the continent. Authorities in Nigeria, Ecobank’s biggest market, have been forced to devalue the local unit three times in the last two years.
Access Bank, Nigeria’s biggest lender by assets, said it will target growth in markets with stronger currencies in a bid to protect its balance sheet and stabilise income.
Ecobank had a cost-to-income ratio of 59% in 2021 and doesn’t expect it to change markedly this year. It expects the ratio to decline to 55% by 2024. Business conditions are likely to improve over the next three years, as the lender benefits from diversification and African economies recover,
according to Adepoju.
Improvements in businesses in some of the economies led to the recovery of $240 million in non-performing loans last year, resulting in the ratio of non-performing loans to total credits improving to 6.2% from 7.6% in 2020. The ratio is expected to improve further to less than 5% by 2024, the CFO said.