Corporate Governance Issues Present Opportunities For ETI – Albert Essien

Eco PixEcobank Transnational Incorporated (ETI), parent company of Ecobank Ghana, says lessons learnt from the corporate governance issues that recently confronted the bank will make it a stronger institution.

“However regrettable 2013’s corporate governance issues may have been, they have provided us with a window of opportunity to refresh and improve our processes and systems, particularly at board level,” Albert Essien, ETI’s Group Chief Executive Officer, told shareholders at the 26th annual general meeting held in Lome, Togo.

“We do not underestimate the challenges ahead but, in learning from the recent past, Ecobank will undoubtedly emerge as a stronger institution. I have a loyal and talented team behind me who can now focus on driving the business forward, providing excellent customer service and improving efficiency and returns,” he said.

The bank was recently confronted with corporate governance issues leading to the removal of Thierry Tanoh, as the chief executive officer by the board.

Consequently, shareholders at an extraordinary general meeting voted to implement reforms designed to address the issues.

Mr. Essien said strong corporate governance enhances a company’s sustainable business performance, which was in the interest of stakeholders.

On the bank’s performance in 2013, Mr. Essien said despite the regulatory headwinds in Nigeria, the bank achieved most of the financial targets that it set out to attain during the period under review.

“Despite a challenging operating environment in 2013, Ecobank registered impressive organic growth in terms of both revenues and assets. Revenue broke through the US$ 2 billion mark, whilst strong growth in both customer loans and deposits led to a 13 per cent year-on-year increase in total assets to US$ 22 billion,” he said.

The bank’s continued focus on efficiency across the bank’s diversified platform is bearing fruit, with the cost-to-income ratio improving in each of its six geographical clusters in Africa.

However, the 2013 results have been impacted by the bank’s conservative decision to a one-off US$ 165 million provision against certain legacy non-performing assets in Nigeria.

This led to a 34 per cent decline in pre-tax profit to US$ 222 million in comparison with 2012 and a 48 per cent decline in net profit to US$ 148 million.

“As our parent company ETI generated no distributable earnings in 2013, we are unable to propose a dividend payment for the financial year in review,” he said.

On the performance of the bank’s clusters Mr. Essien said despite the depreciation of the cedi, Ghana and the rest of West Africa region had again been the Group’s outstanding performer, registering a 34 per cent increase in net profits and an impressive return on equity of 37 per cent.

Francophone West Africa, a consistently profitable business for Ecobank, benefited from the recovery in economic activity in Mali and strong lending activity in Cote d’Ivoire and Burkina Faso.

Mr. Essien said Nigeria’s 17 per cent year-on-year growth in net revenue was encouraging.

“An increase in lending activity within the power, telecoms and cement sectors led to an 18 per cent growth in net interest income. However, the increase in the cash reserve ratio on public sector deposits from 12 per cent to 50 per cent impeded our earning assets,” he said.

In another development shareholders have elected Mr. Emmanuel Ikazoboh, a certified accountant as the new chairman for ETI.

Mr. Ikazoboh said the bank was poised to building on the success it had chalked over the years.

He pledged his commitment to establishing the highest standards of corporate governance that enables effective decision making, with clear responsibilities.

 

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