ECOBANK Zimbabwe said Tuesday that profits before tax reached $1,2 million over the first six months of this year, a 2,370 percent improvement on the comparative period in 2012.
The growth, according to managing director Daniel Sackey, was also driven by lower cost funds aided by an increased contribution from low interest bearing deposits.
“The Bank continues to pursue a growth strategy buttressed by increased investment in human capital and distribution channels. The pursuit of this strategy has resulted in the bank’s operating costs rising by 36 percent year-on-year,” he said.
“In addition to boosting fee income, this strategy has resulted in a significant improvement in the proportion of non-interest bearing deposits to total deposits from 41 percent to 61 percent which translated into a reduction of the bank’s average cost of funds and improved net interest income.”
Chairman David Whatman said in spite of the macro-economic uncertainties that weighed on the local operating environment, Ecobank Zimbabwe managed to register an improvement in profit before tax.
The bank’s net interest income was up 116 percent at US$4,6 million after the parent company extended more lines of credit to the local unit.
Operating costs, according to Sackey, were up 36 percent year-on-year, driven by investments in the distribution network, human capital and enhanced technology infrastructure.
The company had 11 branches in the six months under review and three more branches are expected to be on board by year end.
Whatman said deposits remained largely transitory thus constraining asset creation, in particular the funding of the productive sectors of the economy.
He said funding challenges, low product demand and obsolete machinery and technology continued to have a negative impact on productive sector capacity utilisation levels.
At the group’s Annual General Meeting in June this year Ecobank Transnational Incorporated secured shareholders’ approval to ensure that the bank is not taken over by any institution or dominated by one country.
Some of the institutions that have so far taken up a substantial holding in Ecobank include NedBank Group and Public Investment Corporation both from South Africa as well as the private sector arm of the World Bank, International Finance Corporation (IFC).Advertisement
The company’s encouraging financial performance over the years had seen many institutions move in to acquire a stake in the bank.
Ecobank Transnational Incorporated’s revenue grew by 46 percent in 2012 to US$1,75 billion, driven by increases in net interest income and non-interest revenue to 47 percent and 46 percent respectively.
With an asset base of about US$20 billion, Ecobank is listed on the Nigerian, Ghanian and Ivory Coast stock exchanges and has operations in 33 African countries as well as international offices in France, England, United Arab Emirates and China.
During his visit to Zimbabwe early this year, group CEO Thierry Tanoh said Ecobank Zimbabwe was on a growth trajectory, adding the unit had been indigenised and would “continue to be compliant with the country’s laws”.