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HomeCompany NewsEcobank Sees Slower Growth in 2022 due to weaker African Currencies

Ecobank Sees Slower Growth in 2022 due to weaker African Currencies

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  • Lender predicts revenue growth to slow 1%-3% in 2022, from 5%

Ecobank Transnational Inc, the pan-African lender with operations in 35 countries, foresees slower growth this year as a devaluation of local currencies pushes up its costs and make it more difficult for its clients to do business.

The Togo-based lender predicts revenue growth will slow to 1% to 3% this year, from 5% in 2021, while loan extensions will probably increase by a maximum 3 per cent, after growing 4 per cent the previous year, Chief Financial Officer Ayo Adepoju said on an investor conference call on Thursday. Customer deposits are likely to rise by 3 per cent to 5 per cent, down from 8 per cent, he said.

“These targets reflect as best as we could the uncertainties that we are all facing in the current environment,” the CFO said. “The strengthening of the U.S. dollar has put pressure on our local currencies.”

All but three of the 19 African currencies monitored by Bloomberg have weakened against the dollar since the start of March 2020, the month that the coronavirus was first detected on the continent.

Authorities in Nigeria, Ecobank’s biggest market, have been forced to devalue the local unit three times in the last two years. Access Bank, Nigeria’s biggest lender by assets, said last week it will target growth in markets with stronger currencies in a bid to protect its balance sheet and stabilize income.

Ecobank had a cost-to-income ratio of 58.9% in 2021 and doesn’t expect it to change markedly this year, although it is expected to decline to 55 per cent by 2024.

Business conditions are likely to improve over the next three years, as the lender benefits from diversification and African economies recover, according to Adepoju.

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