Ecobank Ghana on June 8, 2023, held its 18th Annual General Meeting (AGM) at their Head Office in Accra, highlighting on investment in technology and other areas that allow them to improve their service delivery and the best customer experience at the lowest cost.

On performance, Accordingly, it is important to know that our cost-to-income (CIR) reduced from 46.24% to 43.47% for the year under review, due to prudent cost reduction measures.

Ecobank has been rightly positioned as the go-to-bank for intra-African trade, especially with the coming into existence of AfCFTA. Just last week, we launched the Ecobank Single Market Trade Hub portal, at the Group level, as part of our commitment to promoting trade across the continent.

This is a cutting-edge digital platform for sharing information and is designed to respond to the evolving trading needs of SMEs and large corporates within Africa's single market. We have, so far, leveraged Ecobank’s wide client base and network advantage to sign on over 300 businesses from 22 countries, which is a good sign that the offer really meets existing market needs.

This remarkable performance is reflective of the Bank’s consistent strategy of building a diversified business model with a focus on growing revenue and managing costs and risks, even in the face of a highly competitive environment.

Speaking at the annual AGM, Mr. Dan Sackey, said “Our aim is to continue to invest in technology and other areas that allow us to improve our service delivery and the best customer experience at the lowest cost. The investment in technology is allowing us to automate most of our processes and serve a greater number of our customers digitally where the cost to serve is much lower.

We also operate a zero tolerance for spending overruns by evaluating spending in detail – either as a revenue booster or a cost savings catalyst.

According to Mr. Sackey, Ecobank is one of the leading financial services providers that is also very strong in digital and electronic banking, including the use of the USSD code. These services provide great convenience to our customers but are associated with risks emanating from the activities of fraudsters.

We, therefore, owe it a responsibility to safeguard the interest of our clients who transact on these channels, and that is what we have been doing. The question therefore is not about how many customers or how much money is involved but rather, how we are able to protect the funds of our customers.

On the technology front, we have been doing this in varied ways. We also take it upon ourselves to educate our customers on ways to avoid falling prey to the activities of fraudsters.

He indicated most of the fraudulent cases recorded are related to SIM swaps or identity theft, which is only possible when fraudsters take control of one’s mobile phone number, using the person’s stolen personal data. So, clearly, the point of vulnerability is at the Telco end and that is why we continue to work with all Telcos to bring this menace to an end, or at least, minimize it drastically.

We also expect to make much progress on this, as the Telcos have all complied with the directives of the NCA by deactivating over 9 million unregistered SIMs.

We will use this opportunity to further remind our customers and all people performing financial transactions electronically that protecting bank their accounts is a two-way responsibility.

I. The bank has an obligation to keep customer accounts secure, and confidential and alert customers upon noticing suspicious transactions, among others.

II. Customers also have the obligation to keep bank and personal details confidential and never give out such information to anyone, whether remotely or face-to-face. Customers should never give out any of the following:

1. Passwords

2. Personal Identification Number (PIN)

3. Time Password (OTP),

4. Card Verification Value (CVV); the 3 letters at the back of a debit or credit card,

5. Card PAN; the 16-digit card number at the front of a debit or credit card

6. Expiry date on a debit or credit card

7. or any other personal information, such as past transaction details, date of birth, etc.

"Rest assured that Ecobank IT platforms remain very robust, and we continue to explore ways to protect customers from activities of scammers" he added.

The Ghana Domestic Debt Exchange Programme (DDEP) had an impact on the bank’s financial performance in 2022 and the first quarter of 2023. 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.

The bank has booked the required impairment and closed the chapter on local bonds. The bank remains very liquid, solvent and the most capitalized bank after the debt exchange program.

We remain confident in our capacity to recover and return to profitability by the end of 2023. The Bank will prioritize the rebuilding of its capital base and liquidity buffers with the objective to deliver superior Return on Equity (ROE) for our valued shareholders. The non-performing loans (NPLs) were well contained and recorded a reduction from 6.22% in 2021 to 5.66% in 2022(IFRS)

The outlook for 2023 shows that the macroeconomic environment will be challenging. Revenues, particularly income from investments, will be slightly affected because the new bonds have lower coupons than the previous ones.
However, the Medium to Long term fundamentals of the economy remains encouraging, particularly, with the speed with which the country has been able to secure an IMF deal and we are optimistic that the government and its major stakeholders will navigate well through the economic headwinds, which we view as only short term.

The digital journey of Ecobank started from November 2016, when we blazed the trail with the introduction of the Ecobank Mobile APP. We have subsequently introduced many more innovative digital and electronic banking platforms to enable our customers, both individuals, and businesses, to transact conveniently and cost-effectively.

We look back with great pride and satisfaction today, as these digital platforms have become the primary touchpoints for our customers, accounting for more than 90% of all transactions.

As a bank, we prioritize maximizing return on investment to our shareholders through rendering exceptional services to our clients and being an employer of choice.

In the year under review, we believe we were able to deliver on our promise to our customers and employees, resulting in record revenues of almost GHS3 billion.

However, the DDEP has significantly impacted our bottom line such that we could not declare profit to our shareholders. We are confident that we can overcome this setback as quickly as possible and return to setting the pace when it comes to shareholder value maximization.

Our strategic investment in technology and digital advancement has enormously benefited our customers (mainly convenience and cost-effectiveness), our business operations (in terms of improved revenues and the cost to serve), as well as our shareholders.

The huge shift in the consumption habits of our customers in favour of digital banking demonstrates a growing preference for the convenience of doing banking remotely, from their homes and offices. We, therefore, believe that the future of banking will continue to be digital, and we will thus continue to invest in the right technology to support our clients.

The impact of the DDEP on the banking sector has been very significant given that new bonds have a lower coupon than the previous one. However, the impact on Ecobank has been well contained in view of our strong fundamentals, especially in the areas of the capital, overall balance sheet size, revenue generation capacity, profitability, and the benefit of our diversification. This is a clear demonstration of the resilience of the business of the bank.

In line with an expected reduction in inflation, rates are likely to reduce which will affect other areas of the business such as loans and liquidity, a reduction in the cost of funds and cost of doing business.

As a bank, we continue to leverage the strength of our franchise and diversification, our wide platform coverage to deal with the situation. Given the size of our balance sheet, especially being the bank with the biggest capital at the end of 2022 even after the effects of the DDEP means we are in a better situation to weather the storm.

We continue to deploy our assets prudently to reposition our portfolio such that risk is minimized without compromising returns.

As a bank, we have very robust credit appraisal processes which give rise to a strong loan book. As a result, our NPL ratios improved from 6.22% in 2021 to 5.66%(IFRS) and from 12% to 9.47% (Bank of Ghana) at the end of 2022, which is an enviable performance, compared with our peers and the industry average.

It is refreshing to see that banks have started recovering from the loss of positions in 2022. This speaks to the strength of the industry. Much as the level of uncertainty has reduced due to the DDEP, it cannot be said that the challenges are over. The impact on capital, liquidity, and profitability will take some time to diffuse.

Discussions are still ongoing around the Eurobonds as there have not been any restructuring proposals yet on the table by the government. We await to receive official guidance from the government as they engage external creditors.

We hold the view that the recently secured IMF deal would help accelerate Ghana's economic recovery and support the recovery of bond prices. The program brings a lot of fiscal discipline certainty and credibility, which are essential for all players, including Ecobank.

In addition to restoring macroeconomic stability, the deal will significantly improve the businesses of our customers.
This is important for us as a bank because having a strong customer base is necessary for the bank’s long-term sustainable growth and business prosperity.

However, IMF’s conditionality for full cost recovery for utilities will obviously impact the cost of doing business for our clients which space we will continue to monitor.

The capacity to deploy loans is a function of the availability of liquidity and capital. There is however an expectation overtime of an improved capacity to grow the loan book by rebuilding our capital base. Banks will also need to look for avenues to deploy liquid assets.

However, our strategy as a bank broadly remains unchanged despite the happenings in the economy so starting from 2023, we have been working to implement that strategy, bearing in mind the current economic situation. We will continue to deepen our relationships with customers in all three segments of consumer, commercial, and corporate banking, regarding lending activities in 2023 and 2024.
We believe we are well-positioned to take advantage of lending opportunities as they arise.

It is critical to restoring capital eroded by the DDEP as an important step to ensure the soundness of the industry and the long-term sustainability of banks.

Whilst cashflows of shareholders who rely on dividends have been impacted negatively in the short term, the move will ensure the sustainability of banks and potentially increase returns to shareholders in the medium to long term.