ETI targets 75% NPL coverage, top 3 bank position

Ecobank  Transnational Incorporated, ETI, the parent company of Ecobank Nigeria Limited, said its target is to be one of the top three banks in half of the markets where it operates, including Nigeria. The bank also aspires to achieve Non-performing Loan, NPL, coverage of 75 per cent for 2016 financial year end, as against 71.3 per cent NPL coverage achieved in quarter one 2016. Addressing stockbrokers and the management of the Nigerian Stock Exchange, NSE, at the bank’s Facts Behind Figure presentation, on the Exchange, the Group Chief executive Officer, ETI, Mr. Ade Ayeyemi, said the bank would invest where it has sustainable competitive advantage in order to capture more market shares. He noted that the bank would revisit its operational strategy in the high potential markets, while considering constructive exit from low potential markets.

“Our aspiration in Kenya is not to be one of the top three because we don’t actually have to be one of the top three to win in Kenya. If we can get return-on-equity higher than cost-on-equity in that market, our system will be better. We want to look at Kenya as the fulcrum through which we hold the whole Central,  Eastern and Southern Africa and we believe that if we could do that, we will get an economic of scale.

“Now, there are certain markets where we need to revisit our investment strategy. Like we said, it is about the form of presence because the technology, innovation these days and telecommunication just allow us to be able to participate in the market not all along the day, but if we can participate in the market electronically and with technology, it will make it possible for us to connect with customers and people that are buying and selling for various purposes.

It does give us enough advantage and that is what I mean when I say that we will revisit our investment strategy,” he said. Ayeyemi assured that the bank would commit to creating shareholders’ value by ensuring that its cost-on-equity is lower than return-on-equity going forward.

“As we recognise places that generate returns below cost of capital, we need to take action”, he said, adding “if we don’t take action, then we are not good custodians of assets that were given to us.” On the 2016 financial guidance, Ayeyemi said the bank hopes to grow its deposit by two per cent, while cost-to-income ratio is expected to be between 60-65 per cent within the period. Furthermore, it hopes to achieve return-on-asset of 1.0 – 1.5 per cent.