Ecobank CEO Ade Ayeyemi at the Africa CEO Forum in Kigali, Rwanda in March 2019. Himbaza Pacifique/ACF 2019 Convinced that it is still necessary to improve the financial ratios of his group in order to continue its development, Ecobank’s boss is asking shareholders to be patient.
Money is expensive. A banker for thirty-one years, including three and a half years at the head of Ecobank Transnational Incorporated (ETI), Nigeria’s Ade Ayeyemi knows this better than most. And even if he were sometimes tempted to forget this, the markets will never fail to remind him of this.
In mid-April, for its first foray into the international bond market, ETI had to accept an annual interest rate of 9.5% to borrow $450m over five years. A “successful” and “oversubscribed” first, says Greg Davis, ETI’s chief financial officer, who noted the strong enthusiasm of international investors.
“Predominantly, subscriptions come from Europe, the United Kingdom and the United States,” added Mireille Bokpe-Anoumou, head of communications at the pan-African Bank. No dividend, high profit
At the same time, from Abidjan to Lagos, Accra, Lomé and Johannesburg, thousands of ETI shareholders will have to tighten their belts again. For the third consecutive year, ETI’s management and board of directors recommended that the bank not pay a dividend.
Except for the 2012 financial year, the group’s owners have only been rewarded for the capital they have contributed once in recent years: in 2015, with $69m paid. Withholding dividends is all the more difficult as the group posted a profit of $329m last year, a remarkable increase of 44%. This is the highest profit level reached in this decade, with the exception of 2014 (about $338m).
Above all, it is the first time that ETI has recorded two consecutive profitable financial years since Ayeyemi took over the reins in September 2015. “Given our company’s improved results in 2018, we are aware that shareholders expect to receive dividends,” said Emmanuel Ikazoboh, chairman of the board, in the annual report published in early April. Ecobank’s difficult decisions
The “difficult” decision to waive the payment of dividends is explained, according to the Nigerian manager, by “the new regulatory capital requirements to which the group is subject and by the need to build a liquidity cushion for the holding company”.
In addition, added the Deloitte veteran who was appointed chairman of Ecobank in 2014, “to realise our planned growth initiatives and ensure our victory in key countries […]