Ecobank Ghana is confident of returning to profitability after the bank suffered after-tax losses of GH¢15.30 million due to impairment from the Domestic Debt Exchange Programme (DDEP).

The bank also recorded a pre-tax loss of GH¢27.21 million in 2022, a reversal of the 2021 pre-tax profit of GH¢893.73 million.

But the Pan African lender reaffirmed its dominance in the banking industry with a total balance sheet of GH¢25.77 billion at the end of 2022.

The bank’s total revenue surged by 40.3 per cent, reaching GH¢2.97billion and demonstrating the bank’s ability to grow its income.

The increase in revenue was primarily driven by higher net interest income, fee-based income, and successful trade and cash management initiatives Managing Director of Ecobank Ghana, Dan Sackey, said in an interview after the bank’s Annual General Meeting in Accra that the bank has recorded net impairment charges of GH¢1.7 billion arising from the debt restructuring by the government.

Mr Sackey said the losses were temporary setbacks, which the bank expects to recover by the end of the year.  

“Although the DDEP has resulted in significant impairment losses relating to the bank’s investments in government securities, this is a temporary setback, which we expect to recover quickly from,” Mr Sackey said.

He assured the shareholders that the bank has booked the required impairment and closed the chapter on local bonds and that the Pan African subsidiary was solvent, liquid and the most capitalised after the DDEP.

“We remain confident in our capacity to recover and return to profitability by the end of 2023,” he said.

He said the bank would prioritise the rebuilding of its capital base and liquidity buffers in order to deliver superior Return on Equity (ROE) for its shareholders.

The bank contained its non-performing loans (NPLs) in 2022 and recorded a reduction from 6.22 per cent in 2021 to 5.66 per cent.

Dominance

The Managing Director noted that net interest income grew year-on-year by 63 per cent to GH¢2.5 billion, while its balance sheet remain strong with 44.4 per cent growth to GH¢25.9 billion supported by higher loan volumes and increased lending rates. 

Net interest income remained the largest contributor to revenue, accounting for 85 per cent while non-interest income made up the remaining 15 per cent.

Interest expense also rose by 108.7 per cent due to the disruptive operating environment.

The bank’s Treasury business also experienced challenges, resulting in an 82.5 per cent decline in trading income compared to the previous year.

The bank did not declare any dividends for the year, saying it wanted to sustain the business in line with the central bank’s expectations.

Digital fraud

Mr Sackey said a number of Ecobank customers have been targeted by fraudsters and some of them have actually fallen victims to digital fraud in which significant amounts were moved from customers’ accounts.

He therefore used the occasion to entreat customers of the bank to be wary of fraudsters, saying that bank would continue to develop systems to safeguard customers’ data, but each customer also has a duty to stay alert.

“We would like to use this opportunity to educate our clients on the need to keep personal information safe.

It is important for customers to keep their PIN and account details private at all times to prevent fraudsters from having access to these details,” he added.

The fraud started as a SIM swap at MTN in particular, and ended as digital money transfers from customers’ Ecobank accounts.

Mr Dan Sackey said so far no Ecobank staff has been found culpable in any of those incidents but the telcos whose customers’ SIM cards were swapped in the process are fully cooperating to resolve those specific issues.