We expect Ecobank group’s pan-African reach and stable operating conditions to support its revenue growth prospects.
Although we see risk in the group’s high double leverage, there is adequate liquidity at the holding company level.
Notwithstanding its weaker financial performance, we continue viewing Ecobank Nigeria Ltd. as core to the group’s strategy.
We are therefore affirming our ‘B-/B’ and ‘B/B’ issuer credit ratings on the group’s nonoperating holding company Ecobank Transnational Inc. and Ecobank Nigeria Ltd., respectively.
S&P Global Ratings today said it affirmed its ‘B-/B’ and ‘B/B’ long- and short-term issuer credit ratings on Togo-based Ecobank Transnational Inc. (ETI) and Ecobank Nigeria Ltd.(Ecobank Nigeria), respectively. The outlook on both entities is stable.
The affirmation of our ratings reflects our view that the group’s strong pan-African footprint and strengthened management and governance will support its profitability going forward. This is balanced against the group’s constrained asset quality indicators and capital position.
We think its unique pan-African franchise has attracted a stable base of institutional investors, including Nedbank, Qatar National Bank and South Africa-based Public Investment Corporation, which have positively affected the group’s corporate governance and risk management. We believe the International Finance Corporation’s sale of its 14.1% stake to Arise Invest B.V. reflects continued interest from global investors in Ecobank group and will further support the group’s broader business stability. In our view, the diverse shareholder structure, combined with the group’s strong management team, will ensure the group’s adequate positioning and enable it to benefit from the supportive economic conditions in the West African Economic and Monetary Union (WAEMU), its largest market, improving economic conditions in Ghana, and more stable conditions in Nigeria.
Ecobank group benefits from a sizeable customer base (19 million as at June 30, 2019) and a strong competitive position in its core markets, ranking among the top three banks in 14 of the countries in which it operates. This wide franchise will continue to support the group’s stable and diversified funding base and low cost of funds, which compare favorably with regional peers. The group’s subsidiaries are primarily funded with short-term deposits (88% of the funding base), comprised of retail and nonfinancial corporate current and savings accounts.
We expect loan growth to resume within the next 12 months. This, in conjunction with higher nonoperating revenue and reduced cost of risk compared with prior years, will support earnings growth. We expect the bottom line figures to improve, in conjunction with […]