Business
West African Ecobank set to becoming major player in Africa
(Reuters) – Pan-African Ecobank Transnational is near the end of its geographic expansion across Africa and now plans to focus on organic growth to be among the top three banks in each of the over 30 countries it operates in, its CEO said on Wednesday.
The independent lender, which began as a corporate bank in the 1980s, has expanded into retail banking, especially in the past two decades, with total assets of nearly US$12 billion and US$804 million in revenues in the nine months to September 2011.
“The expansion is really coming to an end. We are opening in Equatorial Guinea at the end of the second quarter this year,” CEO Arnold Ekpe told Reuters in telephone interview from Tanzania, adding that the bank would also like to be in Angola, Mozambique, Southern Sudan, Madagascar and possibly Ethiopia.
“We are in 32 countries, we only have about four or five to go,” Ekpe said of the bank’s plans to have a presence in all countries which it calls ‘middle-Africa,’ which includes all sub-Saharan African countries excluding those of Southern Africa such as South Africa.
However, he added that the bank was still keen on acquisitions as a growth strategy “if an opportunity arises that will enable the bank to increase its market share,” after about 14 acquisitions in the past years in its expansion drive.
Ecobank last year completed the acquisition of Ghana’s Trust Bank in a deal worth US$135 million, making it the top bank in the cocoa, gold and oil producing West African nation. A merger with Nigeria’s Oceanic bank, also completed last year, will enable it to become one of the top lenders in Africa’s major oil producer.
“With the Oceanic transaction, we are one of the top five largest banks in the country. I think it is a significant platform to continue to grow. Our strategy in Nigeria is one of organic growth,” Ekpe said.
Further Consolidation
Ekpe said the African banking sector will continue to see further consolidation, with the field dominated by a small number of very large players.
“That is what is driving our strategy in trying to ensure that we are in the top three in each of the markets that we operate in,” he said.
Ekpe said despite the consolidation and Ecobank’s reach, which could make it attractive, he did not think Ecobank was an acquisition target for others.
“We are not concerned that we would be a target. We think that we have a credible story as an independent institution, we know Africa better than any other bank,” he said.
With over eight million customers, Ecobank had US$5.7 billion in customer loans in its books in the nine months to September 2011, up 18 percent from the previous year, and US$8.9 billion in deposits, up by 22 percent in the same period.
However, it is dwarfed by Africa’s top retail banks such as Standard Bank which had 1.12 trillion rand (US$146 billion) in total assets at the end of 2011, while Absa Bank had 725.96 billion rand (US$94 billion) and FirstRand 697.93 billion rand (US$91 billion).
Ecobank said in a presentation last month that it plans to grow its total assets to US$20 billion and increase return on equity to 25 percent within the next three years.
Ekpe declined to give any forecast for the coming year but said as a rule, the bank was expecting 2012 to be better than last year.